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The Economics of Global Warming 1959-2020


  • Weshah Razzak

    (School of Economics and Finance, Massey University, Palmerston North)


Evidence-based policy re global warming is best relying on a relevant sample of data. Showing close correlation between CO2 and temperature over hundreds of thousands of years is irrelevant today. We choose a sample of annual data from 1959 to-date to provide some statistically robust stylized facts about the relationships between actual CO2 and temperature. Visually, there is a clear upward trend in both data. Time series analyses suggest that CO2 is difference-stationary and temperature is trend-stationary. Thus, the moments (mean, variance, etc.) of the data in levels are functions of time, which means that the correlation between the two variables may be spurious. However, we find no statistically robust evidence of correlation, long run co-variation, long run common trend, or common cycles between CO2 and temperature over a period of 60 years. Nonetheless, at most 40 percent of the variance of the Northern Hemisphere temperature is due to , 20 percent of the Southern Hemisphere, and much less of global temperature.

Suggested Citation

  • Weshah Razzak, 2021. "The Economics of Global Warming 1959-2020," Discussion Papers 2103, School of Economics and Finance, Massey University, New Zealand.
  • Handle: RePEc:mas:dpaper:2103

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    More about this item


    Econometrics of unit root; trend; cycle; VAR; temperature and global warming; CO2; greenhouse gasses; and fossil fuel consumption;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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