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Is Globalization Detrimental to CO2 Emissions in Japan? New Threshold Analysis

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Abstract

Using annual data from 1970 to 2014, this paper examines the effects of globalization on CO2 emissions in Japan while accounting for economic growth and energy consumption as potential determinants of carbon emissions. The structural breaks and asymmetries arising due to policy shifts require attention, and hence, an asymmetric threshold version of the ARDL model is utilized. The results show the presence of threshold asymmetric cointegration between variables. Threshold-based positive and negative shocks arising from globalization increase carbon emissions, while the impact of the latter is more profound. Energy consumption (economic growth) also has a significant positive effect on carbon emissions. Globalization, economic growth, and energy consumption significantly increase carbon emissions in the short run. We suggest that policy makers in Japan consider globalization and energy consumption as policy tools in formulating their policies regarding protecting sustainable environmental quality in the long run. Otherwise, the Japanese economy may continue to face environmental consequences such as undesirable climate change and massive warming at the micro and macro levels as a result of potential shocks arising from globalization and energy consumption.

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Notes

  1. The findings of this study are highlighted here. Interpretations of the findings are discussed in the results section.

  2. The existing literature on the nexus between energy consumption and economic growth is voluminous, with varying results across countries [30, 31].

  3. This study uses natural logarithms for all variables to reduce heteroscedasticity in the data series.

  4. Please see: http://globalization.kof.ethz.ch/.

  5. CUSUM and CUSUM squared tests of Brown et al. [49] were used to test the constancy of the estimated parameters in NARDL model.

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Authors and Affiliations

  1. Energy Research Centre, Montpellier Business School, Montpellier Research in Management, Montpellier, France

    Muhammad Shahbaz

  2. Montpellier Business School, Montpellier, France

    Syed Jawad Hussain Shahzad

  3. Department of Humanities and Social Sciences, National Institute of Technology (NIT), Rourkela, Odisha, 769008, India

    Mantu Kumar Mahalik

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  1. Muhammad Shahbaz
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  3. Mantu Kumar Mahalik
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Correspondence to Muhammad Shahbaz.

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Shahbaz, M., Shahzad, S.J.H. & Mahalik, M.K. Is Globalization Detrimental to CO2 Emissions in Japan? New Threshold Analysis. Environ Model Assess 23, 557–568 (2018). https://doi.org/10.1007/s10666-017-9584-0

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