Global Temperatures and Greenhouse Gases: A Common Features Approach

37 Pages Posted: 10 Oct 2019 Last revised: 13 Oct 2019

See all articles by Li Chen

Li Chen

WISE and School of Economics, Xiamen University

Jiti Gao

Monash University - Department of Econometrics & Business Statistics

Farshid Vahid

Monash University - Department of Econometrics and Business Statistics

Date Written: September 30, 2019

Abstract

We propose a common features approach for testing for common trends and estimating long-run relationships between variables with complex trends. Using this approach, we establish that global temperatures and greenhouse gases share a common trend and we estimate their long-run relationship without conditioning on the exact nature of their trends. We also find cycles in global temperature series that have periods of 72 years and amplitudes that have been non-negligible compared to the warming effect caused by anthropogenic greenhouse gas emissions. Using this model, we forecast future temperatures conditional on representative concentration pathways (RCPs) of greenhouse gases considered by the Intergovernmental Panel on Climate Change. Our forecasts show that in the moderate RCP scenario the cyclical component could play a significant role in the next 30 years, in a way that would make the politics of effective emission control policymaking more challenging.

Keywords: global warming; complex trends; endogeneity; instrumental variables; testing for common trends

JEL Classification: C22; C53; Q54

Suggested Citation

Chen, Li and Gao, Jiti and Vahid, Farshid, Global Temperatures and Greenhouse Gases: A Common Features Approach (September 30, 2019). Available at SSRN: https://ssrn.com/abstract=3461418 or http://dx.doi.org/10.2139/ssrn.3461418

Li Chen

WISE and School of Economics, Xiamen University ( email )

Xiamen, Fujian 361005
China

Jiti Gao (Contact Author)

Monash University - Department of Econometrics & Business Statistics ( email )

900 Dandenong Road
Caulfield East, Victoria 3145
Australia
61399031675 (Phone)
61399032007 (Fax)

HOME PAGE: http://www.jitigao.com

Farshid Vahid

Monash University - Department of Econometrics and Business Statistics ( email )

Wellington Road
Clayton, Victoria 3168
Australia
+61 3 9905 2359 (Phone)

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