Is Climate Change Time Reversible?

20 Pages Posted: 18 May 2022

See all articles by Francesco Giancaterini

Francesco Giancaterini

Maastricht University

Alain Hecq

Maastricht University - Department of Quantitative Economics

Claudio Morana

Università di Milano Bicocca; Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS); Università degli Studi di Milano-Bicocca - Center for European Studies (CefES); Center for Economic Research on Pensions and Welfare Policies (CeRP); Rimini Center for Economic Analysis - Europe ETS; Rimini Center for Economic Analysis - HQ

Date Written: May 17, 2022

Abstract

This paper, exploiting the properties of mixed causal and noncausal models, proposes strategies to detect time reversibility in stochastic processes. These novel strategies can be implemented to verify the time reversibility of stationary stochastic processes. We show that they can also be used for nonstationary processes when the trend component is computed using the Hodrick-Prescott filter characterized by a time-reversible closed-form solution. We then establish a linkage between the concept of environmental tipping point and the statistical property of time irreversibility and investigate whether time reversibility is a feature of climate change using nine climate indicators. While we detect time irreversibility in GHG emissions, global temperatures and fundamental natural oscillations do not show this feature. Under a constructive view, our findings then give hope that correction policies might still help avoid the worst consequences of climate change.

Keywords: mixed causal and noncausal models, time reversibility, climate change, global warming, generalized Student’s t-distribution, Hodrick-Prescott filter

JEL Classification: C22

Suggested Citation

Giancaterini, Francesco and Hecq, Alain and Morana, Claudio, Is Climate Change Time Reversible? (May 17, 2022). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 498, Available at SSRN: https://ssrn.com/abstract=4112308

Francesco Giancaterini

Maastricht University ( email )

Maastricht, Limburg
Netherlands

Alain Hecq

Maastricht University - Department of Quantitative Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

HOME PAGE: http://www.maastrichtuniversity.nl/a.hecq

Claudio Morana (Contact Author)

Università di Milano Bicocca ( email )

Dip Economia Metodi Quantitativi Strategie Impresa
Piazza dell'Ateneno Nuovo 1
Milano, 20126
Italy
+39 0264483091 (Phone)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

Università degli Studi di Milano-Bicocca - Center for European Studies (CefES) ( email )

U6 Building
Viale Piero e Alberto Pirelli, 22
Milano, 20126
Italy

Center for Economic Research on Pensions and Welfare Policies (CeRP) ( email )

Moncalieri, Turin
Italy

Rimini Center for Economic Analysis - Europe ETS ( email )

Piazza Ateneo Nuovo 1
Milan, 20126
Italy

Rimini Center for Economic Analysis - HQ ( email )

900 University Avenue
Riverside, CA 92521
United States

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