Wavelet Analysis of CO2 Emissions’ Co-movement: An Investigation of Lead–lag Effect among Emerging Asian Economies

Abstract

The rapidly increasing emissions of carbon dioxide as the main greenhouse gas have been witnessed world over in last few decades. In similarity to other continents, Asia has been affected by the carbon dioxide gas emissions over the past decades. A number of researches conducted in the past studied various aspects of CO₂ emissions sources in Asia. However, this study aims to investigate the interrelationship of selected Asian countries regarding the CO₂ emissions co-movements with focus on Pakistan during the period of different crises. We used WDI (World Development Indicators) yearly data for each country and compared Pakistan’s metric tons per capita CO₂ emissions with those of China, Indonesia, India, Iran, Japan, Singapore, Korea, Malaysia, Sri Lanka and Turkey. Contrasting with the contemporary methods, the data is analyzed through separate wavelet power spectra, wavelet coherence and cross-wavelet transform for the determination of correlation. These models are potentially capable of analyzing the co-movements among the countries with reference to time and frequency spaces. Study being conducted at the country level; the analytical findings may directly benefit the environmental planning. The findings are useful for policy makers, regulators and environmentalists. Further discussions on environmental problems is expected to be triggered by the results of this study.