According to Pesaran and Shin (1999), the SBC is generally used in
preference to other criteria because it tends to define more parsimonious
specifications. With the limited observations, this study used the
SBC to select an appropriate lag for the ARDL model. Table 3 presents
the estimated ARDL model that has passed several diagnostic tests
that indicate no evidence of serial correlation and heteroskedasticity.
The bounds F‐test for cointegration test yields evidence of a
long-run relationship between per capita carbon emissions, per capita
energy consumption, per capita real income, the square of per capita
real income, openness and financial development at 1% significance
level in Turkey (See Table 3).
In addition, due to the structural changes in Turkish economies it
is likely that macroeconomic series may be subject to one or multiple
structural breaks. For this purpose, the stability of the short-run and
long-run coefficients are checked through the cumulative sum
(CUSUM) and cumulative sum of squares (CUSUMSQ) tests proposed
by Brown et al. (1975). Unlike Chow test, requires break point(s) to
be specified, the CUSUM and CUSUMSQ tests are quite general tests
for structural change in that they do not require a prior determination
of where the structural break takes place. Fig. 1 presents the plot of
CUSUM and CUSUMSQ tests statistics that fall inside the critical
bounds of 5% significance. This implies that the estimated parameters
are stable over the period