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

Shahbaz, Muhammad, Shahzad, Syed Jawad Hussain, Mahalik, Mantu Kumar
Environmental modeling and assessment 2018 v.23 no.5 pp. 557-568
carbon, carbon dioxide, climate change, economic development, energy, energy use and consumption, environmental quality, globalization, greenhouse gas emissions, issues and policy, models, Japan
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.