Munich Personal RePEc Archive

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

Shahbaz, Muhammad and Shahzad, Syed Jawad Hussain and Kumar, Mantu (2017): Is Globalization Detrimental to CO2 Emissions in Japan? New Threshold Analysis.

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Abstract

Using annual data 1970-2014, 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 the variables. The threshold-based positive and negative shocks arising in 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 should consider globalization and energy consumption as policy tools while formulating their policies towards 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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