See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/349733704

Do CO 2 emissions, energy consumption and globalization promote economic

growth? Empirical evidence from Japan

Article  in  Environmental Science and Pollution Research · July 2021

DOI: 10.1007/s11356-021-12495-8

CITATIONS READS

22 429

1 author:

Tomiwa Sunday Adebayo

Cyprus International University
164 PUBLICATIONS   5,182 CITATIONS   

SEE PROFILE

All content following this page was uploaded by Tomiwa Sunday Adebayo on 03 March 2021.

The user has requested enhancement of the downloaded file.

Environmental Science and Pollution Research
https://doi.org/10.1007/s11356-021-12495-8

RESEARCH ARTICLE

Do CO2 emissions, energy consumption and globalization promote

economic growth? Empirical evidence from Japan
Tomiwa Sunday Adebayo 1

Received: 11 November 2020 / Accepted: 11 January 2021

# The Author(s), under exclusive licence to Springer-Verlag GmbH, DE part of Springer Nature 2021

Abstract
In the empirical literature, there is no agreement on the linkage between environmental deterioration and economic growth. Thus,
this paper aims to explore the long-run and causal effects of CO2 emissions, globalization energy usage, trade openness and
urbanization on economic growth in Japan by employing new econometric techniques. The paper uses a dataset spanning from
1970 to 2015 and employs recent econometric techniques. To the best of the investigator’s understanding, no prior studies have
examined this linkage utilizing the wavelet coherence technique for Japan. The novelty of the wavelet is that it can capture the
causality and long-run linkage between economic variables at different frequencies and periods. Thus, the study’s aim is to
address the following questions: (i) Is there a long-run and causal linkage between economic growth, energy usage, urbanization,
CO2 emissions, trade openness and globalization? (ii) What is the interaction between economic growth and the regressors at
various frequencies and periods? The paper utilizes the ARDL, DOLS and FMOLS to catch the long-run effects, whereas the
wavelet coherence technique is employed to capture the causal effects among the indicators. The outcomes of the ARDL show
that urbanization, CO2 emissions, globalization and energy usage trigger economic growth, while no significant linkage is found
between trade openness and economic growth. The wavelet coherence approach reveals (i) positive co-movements between
economic growth and the regressors and (ii) a one-way causality from CO2 emissions and energy usage to economic growth.

Keywords CO2 emissions . Energy consumption . Economic growth . Trade openness . Globalization . Wavelet coherence

Introduction a GDP amounting to $US4.872 trillion in 2018 (World Bank,

Japan is one of the nations that attended the Paris Conference
in December 2015 to find a way of combating climate change
and reducing GHGs. The primary goal of the landmark Paris
Accord is to maintain the temperature increase below 2°C
above pre-industrial levels and to continue to push it to
1.5°C (IEA, 2018). Japan is the leading importer of liquefied
natural gas and it is ranked 4th in terms of the imports of coal
and petroleum products globally. Japan has minimal domestic
energy resources, which have accounted for less than 10% of
the country’s overall primary yearly energy usage since 2012.
Japan is the 3rd biggest economy globally behind China with
Responsible editor: Ilhan Ozturk
* Tomiwa Sunday Adebayo
twaikline@gmail.com
1
Department of Business Administration, Faculty of Economics and
Administrative Science, Cyprus International University,
TR-10 Mersin, Nicosia, Northern Cyprus, Turkey
2020) and the 7th largest emitter of GHGs. Its decarbonization
efforts were postponed after the Fukushima nuclear crisis in
2011, which prompted it to move away from nuclear power
and increase fossil fuel usage. The government of Japan is
now preparing to boost both green and nuclear power.
Nevertheless, it also plans to install a large number of new
coal power plants. Japan has vowed to cut GHGs by 26%
below the 2013 levels by 2030.
The interaction between the environment, economic
growth and energy use has attracted significant interest from
scholars over the last decades. It is commonly accepted that
energy can be represented as an input in the production func-
tion. Energy can also make a major contribution to a country’s
economic development (Masih and Masih, 1996; Odhiambo,
2009; Gozgor et al., 2018; Altinay and Karagol, 2005;
Shahbaz et al. 2018; Akadiri et al., 2019; Baranzini et al.,
2013; Ha & Ngoc, 2020; Udemba et al., 2020). Despite the
importance of energy to economic growth, it also has detri-
mental impacts on environmental quality (Saidi & Hammami
2015; Al-Mulali & Sab 2012; Ouyang & Li, 2018; Shahbaz

et al. 2018; Akadiri et al., 2019; Khan et al., 2019a, b) includ-
ing greenhouse gas (GHG) pollution, change in climate and
global warming. As per the United Nations Millennium
Development Goals Report (2015), global CO2 emissions
rose by almost 50% from 1990 to 2015. Since clean air and
a sustainable climate are by far the most critical indicators
required for survival, CO2 emissions are believed to represent
the greatest danger and obstacle to all nations globally.
However, some researchers (Udemba et al. 2020; Shahbaz
et al. 2018; Gozgor et al. 2018; Saidi & Hammami 2015) have
recently established that environmental deterioration im-
proves a nation’s economic growth. This implies that a nation
with a more industrialized economy would have a greater
exposure to CO2 emissions.
Nevertheless, several studies have demonstrated an inverse
association between CO2 emissions and economic growth. In
contrast, a nation with a higher degree of economic growth
and prosperity can expand the renewable energy sources us-
age more effectively and efficiently. Thus, as revealed by
numerous scholars (Awosusi et al., 2020; Balli et al., 2019;
Khan et al., 2019a, b; Kalmaz & Kirikkaleli, 2019; Sarkodie
& Strezov, 2018; Pata, 2018; Rana and Sharma, 2019; Leal &
Marques, 2020; Mehmood and Tariq, 2020; Koc & Bulus,
2020), there is no consensus on the interconnection between
CO2 emissions and economic growth through investigation of
the environmental Kuznets curve (EKC). For example, in the
study of Leal and Marques (2020) on the linkage between
economic growth and CO2 emissions, the investigators
found that the EKC hypothesis is valid for globalized
nations, while it is not valid for less globalized nations.
Furthermore, the study of Koc and Bulus (2020) found an
N-shaped interaction between CO2 and economic expansion,
while the study of Al-Mulali & Sab (2012) found an inverted
U-shaped connection in high- and middle-income nations. It is
clear from the findings above that the linkage between eco-
nomic growth and environmental degradation are mixed.
Thus, this study intends to shed more light on the intercon-
nection between economic growth and CO2 and also explores
the impacts of urbanization, trade openness and energy usage
on economic growth. Therefore, a thorough examination of
the interconnection between economic growth, energy usage,
globalization, trade openness and CO2 emissions is vital to
comprehend the related question: Do energy usage, globaliza-
tion, trade openness, CO2 emissions and urbanization trigger
economic growth in Japan? This question merits and necessi-
tates an in-depth and detailed investigation over a specific
time period.
Over the years, several studies have explored the long-run/
causal impact of globalization, economic growth, urbanization
and CO2 emissions on economic growth using time domain
methods including cointegration, non-linear autoregressive
distributed lag model (NARDL), fully modified OLS
(FMOLS), dynamic OLS (DOLS), auto-regressive distributed
Environ Sci Pollut Res
lag model (ARDL) and ordinary least squares (OLS), which
limit the information effectiveness on policies of economic
growth. Hence, in addition to the ARDL, FMOLS and
DOLS techniques utilized, the present study employs the
wavelet coherence technique to explore these linkages. The
advantage of the wavelet coherence approach is that it can
capture the association/causality at different frequencies and
time periods. The rest of this paper is as arranged as follows:
the “Literature review” section presents a synopsis of related
studies and the theoretical framework. The “Data and model”
section scrutinizes the data and methodology. The results and
discussions are presented in the “Findings and discussions”
section. The policy implications are formulated in the
“Conclusion and policy directions” section.
Literature review
Empirical review
This segment of the current research discusses prior studies on
the linkages between economic growth, CO2 emissions, glob-
alization, trade openness, energy usage and urbanization. The
literature on the interconnections between economic growth
and these regressors is vast. However, there is no concrete
agreement on the interconnections among these economic
indicators. Based on this lack of consensus, this field has
become more fascinating and more contributions are
encouraged. The study of Odugbesan and Adebayo (2020a)
found a positive interconnection between GDP and CO2
emissions in South Africa using data for the period between
1971 and 2016 by employing wavelet coherence. The study of
Khan et al. (2020b) on the G7 countries revealed that econom-
ic growth exerts a positive impact on environmental degrada-
tion. Furthermore, Saidi and Hammami (2015) examined the
interconnection between real growth and environmental
sustainability in the Caribbean, Europe, North and South
America, and North African economies between 1990 and
2012. The investigators utilized GMM and the findings
revealed that energy usage enhances growth in the economy.
In contrast, the study of Ahmed et al. (2020) using the ADRL
and bootstrap-corrected causality tests for Myanmar from
1975 to 2015 established an insignificant link between CO2
and real growth. Adedoyin et al. (2020a, b) examined the link
between economic growth and CO2 emissions using the
BRICS economies as a case study between 1990 and 2014.
The empirical findings showed that increase in economic
growth is accompanied by an increase in CO2 emissions in
the BRICS economies. The study of Adedoyin et al. (2020a,
b) on the top ten earners from international tourism using a
dataset covering the period between 1995 and 2015 revealed
that energy usage and economic growth deteriorate the quality
of the environment. The research of Khan et al. (2020a) using
Environ Sci Pollut Res
nine oil exporting countries between 1990 and 2018 revealed
that increase in economic growth is accompanied by an in-
crease in environmental degradation.
For the ASEAN economies between 2007 and 2017, Bilan
et al. (2019) researched the link between environmental
sustainability and economic expansion utilizing GMM. The
empirical outcomes showed that an increase in environmental
degradation improves real growth. Balli et al (2019) investi-
gated the interconnection between real growth and environ-
mental degradation in Mediterranean nations between 1995
and 2014 using panel econometric techniques. The empirical
results also indicated that CO2 emissions exert a positive im-
pact on economic growth. Additionally, the results of Udemba
et al. (2020), Naz et al. (2019), Adebayo (2020) and
Khoshnevis Yazdi & Dariani (2019) corroborated the findings
of Bilan et al. (2019), who found a positive linkage between
real growth and CO2 emissions. The study of Le and Ozturk
(2020) utilizing recent panel econometric techniques in 47
Emerging Market and Developing Economies (EMDEs) from
1990 to 2014 established a positive interconnection between
economic growth and CO2 emissions. In Pakistan, Khan et al.
(2019a, b) explored the link between environmental
sustainability and GDP growth utilizing a dataset from 1965
to 2015. The investigators used dynamic ARDL and the
findings showed that environmental degradation enhances
economic growth. Using a novel wavelet coherence
approach, Adebayo (2021) investigated the linkage between
CO2 and GDP in Indonesia from 1971 to 2014. The outcomes
of the study showed the positive interconnection between CO2
and economic growth. In Turkey, Kalmaz and Kirikkaleli
(2019) explored the interaction between environmental degra-
dation and GDP growth between 1960 and 2016. The inves-
tigators used wavelet coherence and the outcomes showed that
CO2 emissions enhance GDP.
In addition, several studies have investigated the linkage
between energy usage and economic growth. For example, the
study of Odhiambo (2009) on the interaction between energy
usage and growth in Tanzania established a positive linkage
between energy usage and real growth using a dataset from
1971 to 2006. Utilizing the USA as a case study and by ap-
plying a time-frequency approach, Bilgili et al. (2016) exam-
ined the impact of biomass energy consumption on CO2 emis-
sions using a quarterly dataset from 1984 to 2015. The empir-
ical outcomes revealed that biomass energy consumption im-
proves the quality of the environment. Gozgor et al. (2018)
used the ARDL approach to analyze the link between energy
use and real output in 29 OECD economies. The investigators
utilized a dataset covering the period from 1990 and 2013 to
establish this interaction. The empirical outcomes showed that
energy use increases economic growth in Tanzania. Utilizing
the top ten energy-consuming nations as a case study,
Shahbaz et al. (2018) explored the nexus between GDP
growth and energy using quarterly data between 1960Q1
and 2018Q4. The authors used quantile-on-quantile to estab-
lish this linkage. The empirical outcomes revealed a positive
interaction between GDP growth and energy use. The
research by Ahmed et al. (2017) on the linkage between emis-
sion intensive growth and trade in Southeast Asian Nations
(ASEAN) revealed that economic growth and non-renewable
energy usage increase environmental degradation. Using
ARDL, T-Y causality techniques, Akadiri et al. (2019) inves-
tigated the impact of energy use on GDP in Iraq using a
dataset from 1972 to 2013. The outcomes of the study showed
no evidence of a causal linkage between energy usage and real
growth. In Vietnam, Ha and Ngoc (2020) examined the im-
pact of energy consumption on economic growth using a
dataset between 1971 and 2017. The investigators utilized
NARDL and Granger causality. The empirical outcomes re-
vealed a feedback causality between energy usage and eco-
nomic growth. Utilizing the Cobb–Douglas production func-
tion, the study of Rafindadi and Ozturk (2016) in Japan re-
vealed that financial economic growth and financial develop-
ment exert a positive impact on electricity consumption.
Some studies have investigated the interconnection be-
tween economic growth and trade openness. However, their
results are mixed. For instance, Ijirshar (2019) examined the
linkage between trade and growth from 1975 to 2017 using
ECOWAS as a case study. The author used PMG and MG
estimators and the outcomes revealed that trade enhances
economic growth positively. In addition, Alam and Sumon
(2020) explored the link between trade openness and
economic growth for 15 Asian economies from 1990 to
2017. The investigators used VECM and the results showed
that trade openness improves economic growth, while
evidence was also found indicating a feedback causality
between trade and real growth. In five emerging market
economies, Raghutla (2020) researched the linkage between
trade and growth from 1993 to 2016. The panel causality test
showed proof of a one-way causality from trade openness to
GDP, while the panel ARDL showed that trade openness ex-
erts a positive impact on economic growth. Kong et al. (2020)
investigated the impact of trade on real output in China from
1994 to 2018. The investigators utilized the ARDL approach
and the results revealed that trade stimulates growth in the
economy of China in the short and long run. Furthermore, in
Botswana, Malefane (2020) examined the nexus be-
tween trade and growth between 1960 and 2014. The
investigators used the ARDL method and the findings
revealed that trade impacts real output positively. In
contrast, utilizing the ARDL approach, Malefane and
Odhiambo (2019) found an insignificant linkage be-
tween trade and economic grow th in Lesotho.
Furthermore, Adebayo and Beton Kalmaz (2020) also
found an insignificant linkage between real output and
trade openness in Nigeria. Using the ARDL approach
and a dataset from 1990 to 2016 for the 15-ECOWAS

economies, Guei and le Roux (2019) examined the nex-
us between trade and economic growth, revealing a neg-
ative link between growth and trade.
In addition, some studies have examined the linkage be-
tween globalization and economic growth. However, their
outcomes are mixed. For example, Olimpia and Stela (2017)
explored the linkage between globalization and economic
growth in Romania from 1990 to 2013. The empirical
results showed a positive link between globalization and real
growth. Ivanov and Webster (2012) examined the nexus be-
tween globalization and growth in 167 economies from 2000
to 2010. The empirical outcomes showed an insignificant
interconnection between globalization and economic growth.
Shittu et al. (2020) explored the nexus between globalization
and real output in West Africa between 1996 and 2016. The
investigators used the ARDL approach and the findings
showed that globalization impacts economic growth
positively. Hammudeh et al. (2020) utilized the CS-ARDL
approach to explore the interconnection between GDP and
globalization in 116 economies between 1980 and 2015.
The outcomes showed a U-shaped interconnection between
growth and globalization. In Nigeria, utilizing a dataset from
1981 to 2018 and employing the VECM, Ifeakachukwu
(2020) established a unidirectional causality from globaliza-
tion to growth in the long run.
Furthermore, some studies have examined the interconnec-
tion between urbanization and economic growth, yielding
mixed findings For instance, Udemba et al. (2020) used T-Y
causality and ARDL approaches to analyze the
interconnection between urbanization and real output in
India between 1971 and 2018. The outcomes of the
empirical analysis showed that urbanization enhances
economic growth in the country. Tamang (2013) used
Johansen Cointegration and VECM to explore the link be-
tween urbanization and economic growth in 14 emerging
and 13 advanced nations from 1961 to 2009. The outcomes
revealed that economic growth is influenced by urbanization.
In Sub-Saharan Africa economies, Onjala and K’Akumu
(2016) investigated the nexus between urbanization and
economic growth using a dataset from 1980 to 2012. The
investigators used Panel ARDL and the findings showed an
insignificant linkage between globalization and economic
growth in the SSA nations. Utilizing a dataset from 1995 to
2011, Liu et al. (2015) examined the impact of urbanization on
GDP in China. The investigators used Granger causality and
the findings showed that the interconnection between urbani-
zation and economic growth varies across each region.
Table 1 presents a synopsis of linked studies.
It is clear from the reviewed empirical studies that several
studies have investigated the interconnection among GDP,
CO2, URB, GLO, TO and EU. However, no prior study has
extensively explored the interconnection and causal impact of
CO2, URB, GLO, TO and EU on GDP in the case of Japan
Environ Sci Pollut Res
using the wavelet coherence technique. The advantage of
wavelet coherence is that it can capture the causality and in-
terconnection between series at different frequencies and time
periods. Thus, this current study fills the gap in the existing
literature.
Theoretical background
Simon Kuznets (1955) established this theory, which is pre-
mised on the income disparity known as the Kuznets curve.
Kuznets (1955) analyzed the trend of increasing per capita
income and disparity. There is a turning point in the curve,
which reveals that the per capita income of rural farmers who
leave their agricultural practices to take up professional em-
ployment in urban cities is gradually rising, and this closes the
large distance that exists between the rich and the poor. At this
junction, the income disparity difference is projected to de-
cline, therefore increasing the poor farmers’ per capita in-
come. Environmental economists such as Panayotou (1997),
and Grossman and Krueger (1991) utilized this theory to ex-
plore the interconnection between environmental deterioration
and economic expansion. According to them, growth in the
economy happens in three distinct phases, namely scale effect,
structural and composite effects. In the early phase of growth,
the ecosystem will struggle before a certain point (the turning
point) is reached; at this stage, economic expansion will dete-
riorate environmental quality. The early phase is known as the
scale effect phase, whereas the structural and composite effect
phases are the turning point and the period after the turning
point. The scale effect phase is linked with emerging countries
where the performance of the economy and production activ-
ities are backed by non-renewable energy sources, whereas
the structural and composite effect phases are linked with
industrialized economies where technological innovation
and services dominate economic performance.
Data and model
a. Data
In order to explore the interconnection between economic
growth and environmental sustainability with the effect of
globalization energy usage and trade openness considered,
the present study uses yearly data stretching between 1970
and 2015 for Japan. The dependent variable is the gross do-
mestic product (GDP), while the regressors are carbon emis-
sions (CO2), trade openness (TO), energy usage (EU), urban
population (URB) and globalization (GLO). All the data uti-
lized in this empirical analysis are gathered from the World
Bank (2020) database. A description of the data is presented in
Table 2 and Fig. 1 depicts the flow of analysis. Furthermore,
all the series are transformed into their natural logarithms to
Environ Sci Pollut Res

Table 1 Synopsis of studies

Investigator(s) Timeframe Nation (s) Technique(s) Findings

CO2 emissions and economic growth interconnection

Odugbesan & Adebayo 1971–2016 South Africa ARDL, wavelet coherence CO2→ GDP (+)
(2020a)
Saidi & Hammami 1990–2012 Caribbean, Europe, North and South America, and GMM CO2→ GDP (+)
(2015) North African economies
Ahmed et al. (2020) 1975–2015 Myanmar ADRL, bootstrap-corrected causality CO2≠GDP
Bilan et al. (2019) 2007–2017 ASEAN nations GMM CO2→ GDP (+)
Balli et al (2019) 1995–2014 Mediterranean nations Panel ARDL CO2→ GDP (+)
Khan et al. (2019a, b) 1965–2015 Pakistan ARDL CO2→ GDP (+)
Kalmaz & Kirikkaleli 1960–2016 Turkey ARDL, FMOLS, DOLS, wavelet CO2→ GDP (+)
(2019) coherence
Kirikkaleli & Kalmaz 1960–2016 Turkey ARDL, FMOLS, DOLS, Fourier Toda CO2→ GDP (+)
(2020) Yamamoto CO2→ GDP
Adebayo (2021) 1971–2016 Indonesia ARDL, FMOLS, DOSL, wavelet CO2→ GDP (+)
coherence
Kirikkaleli & Adebayo 1985–2017 Global FMOLS, DOLS, CCR and GDP→ CO2
(2020) frequency-domain causality
Energy usage and economic growth interconnection
Odhiambo (2009) 1971–2006 Tanzania ARDL EU→ GDP (+)
Al-Mulali & Sab (2012) 1980–2008 Sub-Saharan African nations Panel ARDL EU→ GDP (+)
Ouyang & Li (2018). 1996Q1–2015Q4 30 Chinese provinces Panel GMM EU→ GDP (+)
Gozgor et al. (2018) 1990–2013 29 OECD economies ARDL EU→ GDP (+)
Shahbaz et al. (2018) 1960Q1–2018Q4 Ten energy-consuming nations quantile-on-quantile EU→ GDP (+)
Akadiri et al. (2019) 1972–2013 Iraq ARDL, T-Y causality EU≠GDP
Ha & Ngoc (2020) 1971–2017 Vietnam NARDL, Granger causality EU↔GDP
Trade openness and economic growth interconnection
Ijirshar (2019) 1975–2017 ECOWAS PMG, MG TO→ GDP (+)
Malefane & Odhiambo 1981–2016 Lesotho ARDL TO ≠GDP
(2019)
Guei & le Roux (2019) 1990–2016 15-ECOWAS economies ARDL TO→ GDP (-)
Alam & Sumon (2020) 1990–2017 15-Asian economies VECM TO→ GDP (+)
TO↔ GDP
Raghutla (2020) 1993–2016 5-Emerging market economies Panel ARDL, causality TO→ GDP (+)
TO↔ GDP
Kong et al. (2020) 1994 to 2018 China ARDL TO→ GDP (+)
Malefane (2020) 1960–2014 Botswana ARDL TO→ GDP (+)
Adebayo & Beton 1980–2018 Nigeria ARDL, T-Y causality TO ≠GDP
Kalmaz (2020)
Globalization and economic growth interconnection
Olimpia & Stela (2017) 1990–2013 Romania OLS GLO→ GDP (+)
Ivanov & Webster 2000–2010 167 economies OLS GLO→ GDP (+)
(2012)
Shittu et al. (2020) 1996–2016 West Africa ARDL GLO→ GDP (+)
Hammudeh et al. 1980–2015 116 economies CS-ARDL U-shaped
(2020) Interconnectio-
n
Ifeakachukwu, (2020) 1981 to 2018 Nigeria VECM GLO→ GDP
Urbanization and economic growth interconnection
Tamang (2013) 1961–2009 14 emerging and 13 advanced nations Johansen Cointegration, VECM URB→ GDP (+)
Onjala & K’Akumu 1980–2012 SSA nations Panel ARDL URB ≠GDP
(2016)
Liu et al. (2015) 1995–2011 Chinese provinces Granger causality Different
Outcomes
Udemba et al. (2020) 1971–2018 India T-Y causality, ARDL URB→ GDP (+)

EU energy usage, GLO globalization, URB urbanization, TO trade openness, GDP economic growth, OLS ordinary least square, CO2 carbon emissions

ensure conformity to normality. Table 3 presents a description 37.54577 and URB from 75000056 to 1.16E+08. The skew-
of the dataset. GDP ranges from 18699.74 to 47102.58, CO2 ness and kurtosis results reveal that all the variables conform
from 7.368089 to 9.880903, EU from 2458.357 to 4083.832, to normality. Furthermore, the Jarque-Bera probability re-
GLO from 47.79438 to 78.41608, TO from 16.01388 to vealed that all the variables are normally distributed with the
 Environ Sci Pollut Res

Table 2 Data measurement

Variables Sign Measurement

Economic growth GDP GDP per capita constant $2010

Environmental sustainability CO2 Metric tons per capita
Energy usage EU Kg of oil equivalent per-capita
Trade openness TR Trade % GDP
Economic globalization GLO Index based on FDI, trade and portfolio investment and
is obtained from KOF Globalization Index
Urbanization URB Urban population

exemption of GDP. Figure 2 shows the correlation among where the deterministic term vector is depicted by Dt, the
GDP, CO2, EU, TR, GLO and URB. The blue and red colours error term, which is not serially correlated, is depicted by εt.
illustrate positive and negative correlations, respectively. PP test:
b. Methodology
ΔY t ¼ β; Dt þ πY t−1 þ μt ð2Þ

In Eq. 2, μt is I(0). In the PP test, heteroscedasticity in the

Unit root tests
It is essential to examine the series stationarity features, which
is the first task in this current study. Therefore, this paper
utilizes the Augmented Dickey Fuller (ADF) test proposed
by Dickey and Fuller (1981) and the Phillips-Perron (PP) test
initiated by Phillips and Perron (1988). Several researchers
have suggested that owing to the power difference of unit root
tests regarding the size of the sample, it is vital to utilize more
than one unit root test to evaluate the integration order of the
series (Odugbesan & Adebayo 2020a; Saboori, et al. 2017;
Adebayo et al. 2021; Onyibor et al. 2018; Onyibor et al.
2020). The key distinction between the ADF and PP tests is
their sensitivity to serial correlation in error terms and
heteroscedasticity. Equations 1 and 2 illustrate the ADF and
PP tests, respectively;
ADF test:
p
ΔY t ¼ β; Dt þ πY t−1 þ ∑ σ j ΔY t− j þ εt ð1Þ
j−1
error terms and serial correlation is ignored.
Also, since the empirical analysis covered a time timeframe
that included the Asian financial crisis (1997), Japanese asset
price bubble (1990–1991), global financial crisis (2008–2009)
and Fukushima disaster (2011), the conventional unit root
tests (ADF and PP) may yield misleading results (Umar
et al. 2020; Awosusi et al. 2020). Thus, we employed the
Zivot and Andrews (ZA) test initiated by Zivot and Andrews
(2002), which can simultaneously capture the stationarity fea-
tures of the series and a structural break. The ZA test not only
tests the unit root characteristics of each variable, but con-
siders one structural break. The ZA equation is depicted as
follows:
k
Model 1 : Δxt ¼ φ þ φxt−1 þ πt þ δDU t þ ∑ d j Δxt− j
j¼1
þ μt ; ð3Þ

Table 3 Descriptive statistics

GDP CO2 EU GLO TO URB

Mean 35539.18 8.734513 3427.914 62.05983 23.50750 97917195

Median 39347.61 8.879431 3544.262 59.93223 22.36360 96617943
Maximum 47102.58 9.880903 4083.832 78.41608 37.54577 1.16E+08
Minimum 18699.74 7.368089 2458.357 47.79438 16.01388 75000056
Std. dev. 9172.512 0.826587 508.0654 9.114388 5.779581 11824653
Skewness −0.478243 −0.238795 −0.198904 0.258619 0.707606 0.109942
Kurtosis 1.708913 1.545055 1.614001 1.683528 2.523550 2.131354
Jarque-Bera 4.948397 4.494502 3.985219 3.834544 4.273840 1.538882
Probability 0.084230 0.105689 0.136339 0.147007 0.118018 0.463272
Obs 46 46 46 46 46 46
Environ Sci Pollut Res

Fig. 1 Analysis flow

k Model 3 : Δxt ¼ β þ βxt−1 þ βt þ θDU t þ θDT t

Model 2 : Δxt ¼ φ þ φxt−1 þ πt þ γDT t þ ∑ d j Δxt− j
j¼1 k
þ ∑ d j Δxt− j þ μt ð5Þ
þ μt ; ð4Þ j¼1
 Environ Sci Pollut Res

Table 5 ZA Test

GDP CO2 EU GLO TO URB

At level I(0)
C&T −5.061*** −4.498 −3.059 −5.012** −4.462 −6.759*
SB [1988] [1988] [1994] [1996] 1986 [2001]
First difference I(1)
C&T −6.462** −7.329* −5.09** −8.269* −6.577 −9.574
SB [1992] [1988] [2004] [1996] [1986] [2001]

C&T denotes constant and trend, SB single break

*, ** and *** illustrates significance level of 1%, 5% and 10%
correspondingly
Fig. 2 Correlation among GDP, CO2, EU, TR, GLO and URB

where DUt is an indicator dummy variable for a mean shift

et al. (1998), Boswijk (1995), Johansen (1991) and Engle
occurring at each possible break-date (TB), while DTt is the
and Granger (1987) cointegration tests. According to
respective trend shift variable. Formally,
Kirikkaleli and Kalmaz (2020), the Bayer and Hanck (2013)


1…::if t > TB cointegration test overcomes the problems confronted by oth-
DU t ¼ and DT t
0…::if t < TB er cointegration tests. Bayer and Hanck (2013) utilized

Fisher’s formula in the construction of the cointegration test
t−TB…:if t > TB
¼ ð6Þ to strengthen the test. The Fisher equation was illustrated by
0…:: if t < TB Bekun et al. (2019; p.761) as follows;
There are three options when implementing the Zivot-
Andrews unit root test, including at intercept, trend, and both EG−JOH
intercept and trend. Model 1 (Eq. 2) depicts Zivot-Andrews at
intercept, model 2 (Eq. 3) depicts Zivot-Andrews at trend and ¼ −2½ln ðPEGÞ þ lnðPJOH Þ ð7Þ
model 3 (Eq. 4) depicts Zivot-Andrews at both intercept and trend,
which is chosen in our analysis. We choose model 3 because it
combines the characteristics of both intercept and trend together. In EG−JOH−BO−BDM
the three models, the null hypothesis demonstrates that the series xt
encompasses a unit-root with a drift that disregards any structural ¼ −2½ln ðPEGÞ þ ln ðPJOHÞ þ lnðPBOÞ þ ln ðPBDMÞ
break, whereas the alternative hypothesis illustrates that the series ð8Þ
is a trend-stationary process with a single break occurring at an
unidentified point in time. where the level of significance for Engle and Granger
(1987) is indicated by PEG and the level of significance of
Johansen (1991) is represented by PJOH. The levels of signif-
Bayer and Hanck combined cointegration icance for Boswijk (1994) and Banerjee et al. (1998)
cointegration tests are depicted by PBO and PBDM
The study utilizes Bayer and Hanck (2013) as a robust respectively.
cointegration test, which is a combination of the Banerjee

Table 4 ADF and PP tests

GDP CO2 EU GLO TO URB

At level I(0)
C&T ADF −0.876 −2.069 −0.570 −2.645 −1.570 −3.214***
PP −0.934 −2.156 −0.570 −2.645 −1.681 −3.397***
First difference I(1)
C&T ADF −5.649* −6.471* −6.867* −7.282* −6.188* −2.522
PP −5.649* −6.474* −6.867* −7.282* −6.188* −2.302

C&T constant and trend

*, ** and *** illustrates significance level of 1%, 5% and 10% respectively
Environ Sci Pollut Res
ARDL approach
It is vital to capture the cointegration among the series long
before conducting further empirical analysis. Thus, the study
employs the ARDL bounds test to catch the cointegration
among the parameters in the long run. The Pesaran et al.
(2001) bounds test is used to detect the long-term
cointegration of variables as it offers three primary advantages
compared to traditional frameworks of cointegration (Saboori
et al., 2017; Udemba et al., 2020; Adebayo, 2020a). The three
benefits are that it can be utilized when series have a mixed
order of integration, for small sample sizes and for long-term
framework impartial evaluations. If the computed F-statistic is
below the lower bound critical value, the null hypothesis of no
cointegration hypothesis is rejected. Furthermore, if the F-stat
surpasses the lower and upper bound value, we fail to accept
the null hypothesis and a long-run cointegration is confirmed
among the variables. The ARDL bounds test approach for this
study is depicted in Eq. 7 as follows;
t t
ΔGDPt ¼ ϑ0 þ ∑ ϑ1 ΔGDPt−i þ ∑ ϑ2 ΔCO2t−i
i¼1 i¼1
t t
þ ∑ ϑ3 EU t−i þ ∑ ϑ4 ΔGLOt−i
i¼1 i¼1
t t
þ ∑ ϑ5 ΔTOt−i þ ∑ ϑ6 ΔURBt−i
i¼1 i¼1
þ β 1 GDPt−1 þ β 2 CO2t−1 þ β3 EU t−1
þ β4 GLOt−1 þ β5 TOt−1 þ β 6 URBt−1
þ εt
The corresponding long-run multipliers are depicted by
parameters ϑ (i = 1, 2, 3, 4, 5 and 6), while the short-run
dynamic coefficients are represented by parameters β1 (i = 1,
2, 3, 4, 5 and 6) of the basic ARDL model. Exploring the
existence of a long-term interconnection among the variables
in Eq. 7 utilizing the Fisher (F) or Wald (W) statistics is the
first phase in the ARDL-bounds testing method to
cointegration.
The error correction model (ECM) was introduced, which
is transformed from Eq. 7 into Eq. 8 as follows
t t t t
ΔGDPt ¼ ϑ0 þ ∑ ϑ1 ΔGDPt−i þ ∑ ϑ2 ΔCO2t−i þ ∑ ϑ3 EU t−i þ ∑ ϑ4 ΔGLOt−i
i¼1 i¼1 i¼1 i¼1
t t
þ ∑ ϑ5 ΔTOt−i þ ∑ ϑ6 ΔURBt−i þ β 1 GDPt−1 þ β 2 CO2t−1
i¼1 i¼1
þ β 3 EU t−1 þ β 4 GLOt−1 þ β 5 TOt−1 þ β 6 URBt−1 þ ∅ECT t−i þ εt
(10)
where ∅ denotes the adjustment speed, ECT stands for the
error correction term, and ϑ(1…6) portrays the coefficients of
the parameters.
FMOLS and DOLS
To verify the outcomes of the ARDL long-run estimates, we
employ the FMOLS and DOLS tests. While various econo-
metric approaches can be used to evaluate the long-run inter-
connections between variables, the Fully modified OLS
(FMOLS) introduced by Phillips and Hansen (1990) and the
dynamic OLS approach developed by Stock and Watson
(1993) are used in this analysis. These methods permit asymp-
totic coherence to be obtained by considering the impact of
serial correlation. FMOLS and DOLS can only be applied if
there is proof of cointegration between the series. Therefore,
long-term elasticity is calculated with FMOLS and DOLS in
this study.
Wavelet coherence
To further achieve the objective of this study, we explore the
time frequency dependence between GDP, and CO2, GLO,
EU, TO and URB in Japan by using the wavelet coherence
approach. The wavelet approach was initially employed by
Goupillaud et al. (1984). This wavelet coherence approach is
becoming popular and accepted in the economic and finance
literature because it can capture the correlation and causality
between series at different time frequencies and time periods.
The wavelet approach results are very reliable compared to the
other conventional causality-based time domain approaches,
which tend to suffer from chaotic behaviour and non-linearity.
This approach serves as a tool to analyze the times series with
multi-scale decomposition. The wavelet coherence approach
ð9Þ is the major wavelet tool employed in this study. It is well
known and commonly acknowledged that time series are like-
ly to be non-stationary at level. Also, “the major concern with
the standalone frequency-domain technique, more exactly
recognised as the Fourier Transformation, is that by concen-
trating exclusively on the frequency domain, information from
the time domain is totally omitted” (Torrence & Compo,
1998). In addition, a break in the series causes the expected
results of time domain techniques with defined parameters to
be altered (Odugbesan & Adebayo, 2020b). This study uses
the wavelet coherence test to avoid these complications.
The cross-wavelet transform (CWT) has to be done before
the wavelet coherence is performed. However, the cross-
wavelet captures the time series p(t) and q(t) covariance in
the time frequency–based causalities, as shown in Eq. 11:
W pq ðk; f Þ ¼ W p ðk; f ÞW q ðk; f Þ;
ð11Þ
where Wp(k,f) and Wj(k,f) symbolize the CWT for p(t) and
q(t), respectively, which was detailed by Torrence and Compo
(1998). Thus, the squared wavelet coherence (R2(k, f)) can be
illustrated as follows:
 Environ Sci Pollut Res

Table 6 ARDL bounds test in the series, the study utilizes a unit root test that can capture
Model estimated Optimal lag length F-statistics stationarity and a single break in the series. Table 4 depicts the
results of the ADF and PP tests, while Table 5 shows the
GDP=f(CO2, EU, GLO, TO, URB) (5, 4, 5, 5, 5, 5) 8.47* outcomes of the ZA test. The Table 4 outcomes show that
Significant level L-B I(0) U-B I(1) all the variables are non-stationary at level, i.e. I(0), with the
10% 2.26 3.35 exemption of URB which is stationary at level. However, after
5% 2.62 3.79 taking the first difference, i.e. I(1), all the indicators are sta-
2.5% 2.96 4.18 tionary with the exemption of URB, which is non-stationary.
1% 3.41 4.68 The Table 5 results show that GDP, GLO and URB are sta-
tionary at level, i.e. I(0). However, after taking the first differ-
*1% level of significance ence, all the parameters are found to be stationary.
  −1  The study utilizes the ARDL bounds testing technique to
S f W pq ðk; f Þ 2
R ðk; f Þ ¼  
2
2    2  explore the long-run cointegration among GDP growth, CO2
S f −1 W p ðk; f Þ S f −1 W q ðk; f Þ emissions, urbanization, energy usage, globalization and trade
openness in the case of Japan using yearly data stretching
ð12Þ
between 1970 and 2015. The ARDL bounds test is advanta-
From Eq. 12 above, S denotes time, which is a smoothing geous because it is appropriate regardless of the order of inte-
operator over time. R2(k, f) symbolizes intervals within 0 and gration of the series. This removes bias based on the pre-
1. In a situation, when the R2(k, f) approaches 1, it means that testing of the variables’ integration order. The findings in
the time series indicators are correlated, or a causal relation Tables 4 and 5 demonstrate that none of the indicators is
occurs at a certain level between the time series indicators, stationary at I(2). The empirical findings demonstrate that all
which is shown as a red colour surrounded by a black line. variables are stationary at a mixed level, namely I(0) or I(1)
However, when the R2(k, f) reaches 0, it means that the series and I(0) or I(1). Hence, it is possible for us to test the presence
indicators are not associated or have no causal link. R2(k, f) of a long-run interconnection between GDP growth, CO2
only provides the correlation strength and omits the direction emissions, urbanization, energy usage, globalization and trade
or sign of the connection. To solve this problem, Torrence and openness. Table 6 illustrates the cointegration outcomes for
Compo (1998) developed a means via the signs of deferrals in the model. The empirical findings show that there is presence
the wavering of the series, and it is defined as: of cointegration since the F-statistics (8.47) is higher than the
  −1  ! lower and upper bounds critical values.
−1 L S f W pj ðk; f Þ
In order to verify the ARDL bounds test findings, the study
ϕpq ðk; f Þ ¼ tan   
O S f −1 W pj ðk; f Þ utilizes the Bayer-Hanck combined cointegration test as a ro-
bustness check. Table 7 illustrates the result of the Bayer-
ð13Þ Hanck (2013) combined cointegration test. The findings re-
where L and O symbolize the imaginary and real part op- veal that at a 5% level of significance, there is evidence of
erators, respectively long-run cointegration among the variables used in this study.
After the long-run cointegration among the parameters is
established, the study utilizes the ARDL long-run and short-
run estimations to ascertain the effect of CO2, urbanization
Findings and discussions (URB), globalization (GLO), trade openness (TO) and energy
usage on economic growth (GDP). The goodness of fit is
It is essential to ascertain the stationarity properties of the
represented by the R2 (0.99) and Adj R2 (0.99) respectively,
variables. To achieve this, the study employs the ADF and
which illustrate that all the regressors (URB, CO2, GLO, TO
PP tests. Taking into consideration the effect of a single break

Table 7 Bayer-Hanck
cointegration test Models Fisher statistics Fisher statistics Cointegration decision

EG-JOH EG-JOH-BAN-BOS Yes

GDP=f(CO2, EU, GLO, TO, URB) 23.638* 56.462*
CV CV
Significance level at 5% 10.576 20.143

*1% significance level

CV critical value
Environ Sci Pollut Res

and EU) can explain 99% of the variation in GDP, while the This outcome aligns with the findings of Olimpia and Stela
remaining 1% is attributed to the error term. As anticipated, (2017) for Romania, Ivanov and Webster (2012) for 167 econ-
the adjustment speed (−0.67) is negative and statistically sig- omies, Shittu et al. (2020) for West-Africa, Hammudeh et al.
nificant, which shows that a correction in a past period can be (2020) for 116 economies and Ifeakachukwu (2020) for
corrected by the subsequent periods. The outcomes from the Nigeria.
linear ARDL long- and short-run estimations show that CO2 In addition, there is no significant linkage between trade
emissions exert a positive effect on GDP. This implies that openness and economic growth. This outcome complies with
keeping other indicators constant, a 1% increase in CO2 will the results of Malefane and Odhiambo (2019) and Adebayo
increase economic growth by 0.56%. Thus, an increase in and Beton (2020) for Nigeria. Furthermore, various post esti-
environmental degradation is accompanied by an increase in mation tests are conducted to determine whether policy rec-
economic growth. This outcome is consistent with the find- ommendations can be obtained from the model. The empirical
ings of Ahmed et al. (2020) for Myanmar, Bilan et al. (2019) f i n d i n g s f r o m t h e n o r m a li t y , s e r i a l c o r r e l a t i o n ,
for ASEAN nations, Balli et al. (2019) for Mediterranean na- heteroscedasticity and Ramsey tests in Table 8 show that the
tions, Khan et al. (2019a, b) for Pakistan, Kalmaz and model is good and does not suffer from any misspecification.
Kirikkaleli (2019) for Turkey, Adebayo (2021) for Indonesia The results of the CUSUM and CUSUM SQ in Fig. 3a and b
and Kirikkaleli et al. (2020) for Turkey. In addition, there is a also show that the model is stable at a significance level of 5%
positive linkage between energy usage and economic growth. (Table 9).
Thus, when other factors are held constant, a 0.51% increase As a robustness check, the study employs the FMOLS and
in economic growth is caused by a 1% increase in energy DOLS to check the outcomes of the ARDL estimations. The
usage in Japan. This illustrates that energy usage enhances outcomes of the FMOLS and DOLS are presented in
economic growth. This outcome aligns with the findings of Table 9. The FMOLS and DOLS results show that CO2 emis-
Odhiambo (2009) for Tanzania, Gozgor et al. (2018) for 29 sions, energy usage, globalization and urbanization improve
OECD economies, Shahbaz et al. (2018) for ten energy- economic growth, while no significant link is found between
consuming nations, Akadiri et al. (2019) for Iraq and Ha and
Ngoc (2020) for Vietnam.
Furthermore, urbanization exerts a positive effect on eco-
nomic growth. Therefore, when other factors are held con- Table 8 ARDL estimations
stant, a 1% increase in urbanization cause economic growth
to rise by 1.4%. This demonstrates that an increase in urban Dependent variable Regressors Coefficient T- Probability
statistics
population improves economic growth in Japan. This out-
come complies with the findings of Tamang (2013) for 14 Long-run result
emerging and 13 advanced nations, Onjala and K’Akumu GDP CO2 0.5676 3.2666 0.0171**
(2016) for SSA nations, Liu et al. (2015) for Chinese EU 0.5150 2.1971 0.0704***
Provinces and Udemba et al. (2020) for India. This is a strong GLO 0.6198 3.2872 0.0167**
indicator that population and energy intensity are key factors TO 0.0300 1.0441 0.3366
in Japan’s economic development. As one of the main pro- URB 1.4524 2.5874 0.0414**
viders and engines of the economy of Japan, the manufactur- Short-run result
ing industry consumes a huge amount of energy, which in turn GDP ΔCO2 0.1682 2.1042 0.080***
positively enhances growth. Furthermore, globalization af- ΔEU 0.2066 2.2454 0.065***
fects economic growth positively. This shows that a 1% in- ΔGLO 0.2667 2.6065 0.040**
crease in globalization leads to a 0.26% increase in economic ΔTO 0.0300 1.9006 0.106
growth when other indicators are held constant. Thus, global-
ΔURB 1.6166 3.4064 0.014**
ization improves economic growth in Japan. This is anticipat-
ECM(-) -0.6748 -9.6535 0.001*
ed because globalization stimulates industrial development
Diagnostic tests
and eliminates constraints on FDI and commerce. Similarly,
R2 0.99
it opens up the opportunity for markets (such as Japan) to
Adj R2 0.99
optimize the political, social and economic advantages of
χ2 heteroscedasticity 0.60 (0.34)
advanced nations. Again, it improves the transfer of
χ2 Ramsey 1.39 (0.22)
technology, which eventually spurs growth, particularly via
χ2 normality 2.44 (0.26)
the manufacturing industry. As Shittu et al. (2020) stated,
χ2 LM 0.83 (0.44)
globalization is a move towards decentralization and greater
openness that stimulates economic development via the Significance level of 1%, 5% and 10% is depicted by *, ** and ***
transfer of technology and exposure to foreign earnings. respectively
 Environ Sci Pollut Res

Table 9 FMOLS and DOLS

result Dependent variable Regressors FMOLS DOLS
Coefficient T-statistics Coefficient T-statistics

GDP CO2 [0.554] [0.567]

{8.894}* {6.553}*
EU [0.500] [0.515]
{6.158} {4.408}*
GLO [0.245] [0.266]
{3.043}* {2.523}**
TO [0.032] [0.030]
{1.657} {1.589}
URB [1.421] [1.452]
{6.545}* {5.191}*
R2 0.99 0.99
Adj R2 0.99 0.99

The value inside [] and {} denotes the coefficient and T-statistics respectively
*, ** and *** illustrates 1%, 5% and 10% respectively

20
trade openness and economic growth. The empirical findings
15 of the FMOLS and DOLS comply with the ARDL outcomes.
10 In order to establish the causality and correlation be-
tween GDP and CO2, URB, TO, EU and GLO, the study
5
utilizes the wavelet coherence (WTC) approach. This
0 technique is developed from econophysics to gather pre-
-5 viously unobserved information. Thus, the study explores
dependency between GDP and the regressors in the short,
-10
medium and long run. The cone of impact (COI) is the
-15 white cone where interpretation is conducted in the WTC.
-20 The thick black contour portrays a significant level
1980 1985 1990 1995 2000 2005 2010 2015 centred on Monte Carlo simulations. In Figs. 4, 5, 6, 7,
and 9 the short term, medium term and long term are
CUSUM 5% Significance
illustrated by periods 0–4, 4–8 and 8–16, respectively.
a In addition, time and frequency are illustrated on the hor-
izontal and vertical axes. The yellow colour portrays high
1.4
dependence between the series, whereas the blue colour
1.2 shows lower dependence between the parameters. The
1.0 rightward and leftward arrows show positive (in-phase)
0.8 and negative (out-of-phase) relations between the series
examined. According to Batool et al (2019), Adebayo
0.6
(2020), Orhan et al. (2019) and Akinsola and Adebayo
0.4 (2020), rightward-up (leftward-down) arrows illustrate
0.2 that the second variable is leading, while rightward-
0.0 down (leftward-up) arrows denote that the first variable
is leading. Figures 4, 5, 6, 7 and 8 illustrate the wavelet
-0.2
coherence between CO2 and the regressors from 1970 to
-0.4 2015 in Japan. In Fig. 4, at different frequencies (different
1980 1985 1990 1995 2000 2005 2010 2015
scales) from 1978 to 1981 and from 1990 to 2005, the
CUSUM of Squares 5% Significance rightward-up arrows reveal a strong linkage
(dependency) between GDP and CO2 with CO2 leading.
b
Figure 3 a: CUSUM, b CUSUM of Square
Environ Sci Pollut Res
Fig. 4 WTC between GDP and CO2
Figure 5 shows the WTC between GDP and EU from 1970
to 2015. The majority of the arrows are rightward at different
scales (difference frequencies), which illustrate a strong link-
age (dependency) between GDP and EU from 1977 to 1995
with energy usage leading. Figure 6 shows the WTC between
GDP and GLO in Japan. At different scales (different frequen-
cies), from 1974 to 2010, the arrows are rightward, which
denotes strong interconnection (dependency) between GDP
and GLO with globalization leading. Figure 7 reveals the
WTC between GDP and TO. At different scales (different
frequencies), between 1990 and 2011, the rightward-up ar-
rows display strong interconnection (dependency) between
Fig. 5 WTC between GDP and EU
Fig. 6 WTC between GDP and GLO
GDP and TO with trade leading. Figure 8 reveals the WTC
between GDP and URB. At different scales (different frequen-
cies), between 1975 and 1997, the rightward-up arrows dis-
play strong interconnection (dependency) between GDP and
URB with GDP leading. The findings from the wavelet co-
herence test provide supportive evidence for the ARDL,
FMOLS and DOLS outcomes.
Conclusion and policy directions
Using a dataset from 1970 to 2015, the study investigated the
association and causal impact of CO2 emissions, energy
Fig. 7 WTC between GDP and TO

Fig. 8 WTC between GDP and URB
usage, trade openness, urbanization and globalization on eco-
nomic growth in Japan. In order to establish this linkage, the
paper utilized time domain techniques such as the Bounds test,
Bayer and Hanck cointegration, ARDL, FMOLS and DOLS.
Furthermore, it is well-known that time domain techniques
limit information effectiveness on policies. Therefore, the
study utilized the wavelet coherence test, which is a frequency
domain technique used to capture the correlation/causal im-
pact of CO2 emissions, energy usage, globalization, urbaniza-
tion and energy usage on economic growth in the short, me-
dium and long run. To the best of the researcher’s understand-
ing, no prior studies have utilized these combined techniques
to analyze this interconnection in Japan. The bounds test re-
vealed evidence of cointegration among the variables in the
long run. Furthermore, as a robustness check, the study uti-
lized the Bayer and Hanck cointegration test, which confirmed
the outcome of the bounds test. The empirical results from the
ARDL long- and short-run estimations showed that environ-
mental degradation, globalization, urbanization and energy
usage trigger economic growth in Japan, while trade openness
has no significant impact on economic growth. The findings
from the FMOLS and DOLS also provided supportive evi-
dence for the ARDL long-run estimates. The outcomes of
the wavelet coherence revealed positive co-movements be-
tween economic growth and the regressors. Furthermore, the
outcomes of the wavelet coherence established a one-way
causality from CO2, globalization and energy usage to eco-
nomic growth.
The results of this paper have enabled us to agree with the
proponents of the diversification of Japan’s energy intensity.
By introducing a more ambitious approach to clean energy
sources, this can be achieved, which will maintain the momen-
tum of the country’s economy. Developing and adopting
sound policies to moderate Japan’s energy and manufacturing
sector practices will improve the country’s sustainable
Environ Sci Pollut Res
growth. If carbon restrictions are set on industries by the gov-
ernment, this will help to regulate the country’s environmental
degradation. The threat of punitive action or high taxes on
offenders of this policy will deter environmental destruction.
Conservatory energy usage can be implemented by the incor-
poration of renewable energy sources including oceanic ener-
gy, hydropower and wind. The adoption of the above mea-
sures will help to continue Japan’s positive economic devel-
opment and enhanced environmental efficiency. The study
implications will also be beneficial to neighbouring countries.
A major limitation in this study is the unavailability of data
which limits the econometric analysis. Although the current
study presents significant analytical findings for Japan, one of
the crucial disadvantages of this analysis is the scarcity of
data, which restricts the strength of the econometric methods
utilized since data are only available for the period spanning
from 1970 to 2015. In addition, CO2 is utilized as a proxy for
environmental degradation, which is not the only source of
environmental degradation. Thus, further studies should uti-
lize other proxies of environmental degradation to examine
this interconnection in developed and developing countries.
Authors’ contribution The author solely writes the entire manuscript
Data availability Data is readily available at: https://data.worldbank.org/
country/japan
Declarations
Ethical approval This study follows all ethical practices during writing.
Consent to participate The author declares consent to participate.
Consent to publish The author consents to publish this article in
Environmental Science and Pollution Research.
Competing interests The author declares that there are no conflicts of
interest.
Transparency The author confirms that the manuscript is an honest,
accurate and transparent account of the study reported; that no vital fea-
tures of the study have been omitted; and that any discrepancies from the
study as planned have been explained.
References
Adebayo TS, Beton Kalmaz D (2020) Ongoing debate between foreign
aid and economic growth in Nigeria: a wavelet analysis. Soc Sci Q
101(5):2032–2051
Adebayo TS (2020) Revisiting the EKC hypothesis in an emerging mar-
ket: an application of ARDL-based bounds and wavelet coherence
approaches. SN Appl Sci 2(12):1–15
Adebayo TS (2021) Testing the EKC hypothesis in Indonesia: empirical
evidence from the ARDL-based bounds and wavelet coherence ap-
proaches. Appl Econ J 28(1):1–23
Environ Sci Pollut Res
Adebayo T, Akinsola G, Odugbesan J, Olanrewaju V (2021)
Determinants of Environmental Degradation in Thailand:
Empirical Evidence from ARDL and Wavelet Coherence
Approaches. Pollution 7(1):181–196. https://doi.org/10.22059/poll.
2020.309083.885
Adedoyin FF, Nathaniel S, Adeleye N (2020a) An investigation into the
anthropogenic nexus among consumption of energy, tourism, and
economic growth: do economic policy uncertainties matter?
Environ Sci Pollut Res:1–13
Adedoyin FF, Gumede MI, Bekun FV, Etokakpan MU, Balsalobre-
lorente D (2020b) Modelling coal rent, economic growth and CO2
emissions: Does regulatory quality matter in BRICS economies? Sci
Total Environ 710:136284
Ahmed K, Bhattacharya M, Shaikh Z, Ramzan M, Ozturk I (2017)
Emission intensive growth and trade in the era of the Association
of Southeast Asian Nations (ASEAN) integration: An empirical in-
vestigation from ASEAN-8. J Clean Prod 154:530–540
Ahmed S, Alam K, Rashid A, Gow J (2020) Militarisation, energy con-
sumption, CO2 emissions and economic growth in Myanmar.
Defence Peace Econ 31(6):615–641
Altinay G, Karagol E (2005) Electricity consumption and economic
growth: evidence from Turkey. Energy Econ 27(6):849–856
Al-Mulali U, Sab CNBC (2012) The impact of energy consumption and
CO2 emission on the economic growth and financial development
in the Sub Saharan African countries. Energy 39(1):180–186
Alam KJ, Sumon KK (2020) Causal relationship between trade openness
and economic growth: A panel data analysis of Asian countries. Int J
Econ Financ Issues 10(1):118–126
Akadiri SS, Bekun FV, Taheri E, Akadiri AC (2019) Carbon emissions,
energy consumption and economic growth: a causality evidence. Int
J Energy Techn Policy 15(2-3):320–336
Akinsola GD, Adebayo TS (2020) Investigating the Causal Linkage
Among Economic Growth, Energy Consumption and CO2
Emissions in Thailand: An Application of the Wavelet Coherence
Approach. Int J Renew Energy Dev 10(1):17–26
Awosusi AA, Adebayo TS, Adeshola I (2020) Determinants of CO2
Emissions in Emerging Markets: An Empirical Evidence from
MINT Economies. Int J Renew Energy Dev 9(3):411–422
Batool R, Sharif A, Islam T, Zaman K, Shoukry AM, Sharkawy MA,
Gani S, Aamir A, Hishan SS (2019) Green is clean: the role of ICT
in resource management. Environ Sci Pollut Res 26(24):25341–
25358
Baranzini A, Weber S, Bareit M, Mathys NA (2013) The causal relation-
ship between energy use and economic growthin Switzerland.
Energy Econ 36:464–470
Bayer C, Hanck C (2013) Combining non-cointegration tests. J Time Ser
Anal 34(1):83–95
Banerjee A, Dolado J, Mestre R (1998) Error-correction mechanism tests
for cointegration in a single-equation framework. J Time Ser Anal
19(3):267–283
Balli E, Sigeze C, Manga M, Birdir S, Birdir K (2019) The relationship
between tourism, CO2 emissions and economic growth: a case of
Mediterranean countries. Asia Pacific J Tour Res 24(3):219–232
Bilgili F, Öztürk İ, Koçak E, Bulut Ü, Pamuk Y, Muğaloğlu E, Bağlıtaş
HH (2016) The influence of biomass energy consumption on CO 2
emissions: a wavelet coherence approach. Environ Sci Pollut Res
23(19):19043–19061
Bilan Y, Streimikiene D, Vasylieva T, Lyulyov O, Pimonenko T, Pavlyk
A (2019) Linking between renewable energy, CO2 emissions, and
economic growth: Challenges for candidates and potential candi-
dates for the EU membership. Sustainability 11(6):1528
Boswijk HP (1995) Efficient inference on cointegration parameters in
structural error correction models. J Econ 69(1):133–158
Dickey DA, Fuller WA (1981) Likelihood ratio statistics for
autoregressive time series with a unit root. Econometrica: journal
of the Econometric Society 49:1057–1072
Engle RF, Granger CW (1987) Co-integration and error correction: rep-
resentation, estimation, and testing. Econometrica: journal of the
Econometric Society 55:251–276
Guei KM, le Roux P (2019) Trade openness and economic growth:
Evidence from the Economic Community of Western African
States region. J Econ Financ Sci 12(1):1–9
Grossman, G. M., & Krueger, A. B. (1991). Environmental impacts of a
North American free trade agreement (No. w3914). National Bureau
of economic research.
Goupillaud P, Grossmann A, Morlet J (1984) Cycle-octave and related
transforms in seismic signal analysis. Geoexploration 23(1):85–102
Gozgor G, Lau CKM, Lu Z (2018) Energy consumption and economic
growth: New evidence from the OECD countries. Energy 153:27–
34
Ha, N. M., & Ngoc, B. H. (2020). Revisiting the relationship between
energy consumption and economic growth nexus in Vietnam: new
evidence by asymmetric ARDL cointegration. Applied Economics
Letters, 1-7.
Hammudeh S, Sohag K, Husain S, Husain H, Said J (2020) Nonlinear
relationship between economic growth and nuances of globalisation
with income stratification: Roles of financial development and gov-
ernance. Econ Syst 44(3):100761
Ijirshar VU (2019) Impact of Trade Openness on Economic Growth
among ECOWAS Countries: 1975–2017. CBN J Appl Stat 10:75–
96
Ifeakachukwu NP (2020) Globalisation, Economic Growth and Income
Inequality in Nigeria. Ind J Human Dev 14(2):202–212
Ivanov SH, Webster C (2012) Tourism’s impact on growth: the role of
globalisation. Ann Tour Res 41:231–236
Johansen S (1991) Estimation and hypothesis testing of cointegration
vectors in Gaussian vector autoregressive models. Econometrica
59:1551–1580
Khan Z, Ali M, Jinyu L, Shahbaz M, Siqun Y (2020a) Consumption-
based carbon emissions and trade nexus: Evidence from nine oil
exporting countries. Energy Econ:104806
Khan Z, Shahbaz M, Ahmad M, Rabbi F, Siqun Y (2019a) Total retail
goods consumption, industry structure, urban population growth
and pollution intensity: an application of panel data analysis for
China. Environ Sci Pollut Res 26(31):32224–32242
Khan, Z., Ali, S., Umar, M., Kirikkaleli, D., & Jiao, Z. (2020b).
Consumption-based carbon emissions and international trade in
G7 countries: The role of environmental innovation and renewable
energy. Science of The Total Environment, 138945.
Khan MK, Teng JZ, Khan MI (2019b) Effect of energy consumption and
economic growth on carbon dioxide emissions in Pakistan with
dynamic ARDL simulations approach. Environ Sci Pollut Res
26(23):23480–23490
Kalmaz DB, Kirikkaleli D (2019) Modeling CO 2 emissions in an emerg-
ing market: empirical finding from ARDL-based bounds and wave-
let coherence approaches. Environ Sci Pollut Res 26(5):5210–5220
Kirikkaleli D, Kalmaz DB (2020) Testing the moderating role of urban-
ization on the environmental Kuznets curve: empirical evidence
from an emerging market. Environ Sci Pollut Res 27(30):38169–
38180
Kirikkaleli D, Adebayo TS (2020) Do renewable energy consumption
and financial development matter for environmental sustainability?
New Global Evid Sustain Dev. https://doi.org/10.1002/sd.2159
Kirikkaleli D, Adebayo TS, Khan Z, Ali S (2020) Does globalization
matter for ecological footprint in Turkey? Evidence from dual ad-
justment approach. Environ Sci Pollut Res:1–9
Koc, S., & Bulus, G. C. (2020). Testing validity of the EKC hypothesis in
South Korea: role of renewable energy and trade openness.
ENVIRONMENTAL SCIENCE AND POLLUTION
RESEARCH.

Khoshnevis Yazdi S, Dariani AG (2019) CO2 emissions, urbanisation
and economic growth: evidence from Asian countries. Economic
Research-Ekonomska istraživanja 32(1):510–530
Kong Q, Peng D, Ni Y, Jiang X, Wang Z (2020) Trade openness and
Economic Growth Quality of China: Empirical Analysis Using
ARDL Model. Financ Res Lett 101488
Kuznets S (1955) Economic growth and income inequality. Am Econ
Rev 45(1):1–28
Leal PH, Marques AC (2020) Rediscovering the EKC hypothesis for the
20 highest CO2 emitters among OECD countries by level of glob-
alization. Int Econ 164:36–47
Le HP, Ozturk I (2020) The impacts of globalization, financial develop-
ment, government expenditures, and institutional quality on CO 2
emissions in the presence of environmental Kuznets curve. Environ
Sci Pollut Res:1–18
Liu TY, Su CW, Jiang XZ (2015) Is economic growth improving urban-
isation? A cross-regional study of China. Urban Stud 52(10):1883–
1898
Masih AM, Masih R (1996) Energy consumption, real income and tem-
poral causality: results from a multi-country study based on
cointegration and error-correction modelling techniques. Energy
Econ 18(3):165–183
Malefane MR (2020) Trade openness and economic growth in Botswana:
Evidence from cointegration and error-correction modelling. Cogent
Econ Fin 8(1):1783878
Malefane MR, Odhiambo NM (2019) Trade openness and economic
growth: empirical evidence from Lesotho. Glob Bus Rev
0972150919830812
Mehmood U, Tariq S (2020) Globalization and CO 2 emissions nexus:
evidence from the EKC hypothesis in South Asian countries.
Environ Sci Pollut Res 27(29):37044–37056
Naz S, Sultan R, Zaman K, Aldakhil AM, Nassani AA, Abro MMQ
(2019) Moderating and mediating role of renewable energy con-
sumption, FDI inflows, and economic growth on carbon dioxide
emissions: evidence from robust least square estimator. Environ
Sci Pollut Res 26(3):2806–2819
Pesaran MH, Shin Y, Smith RJ (2001) Bounds testing approaches to the
analysis of level relationships. J Appl Econ 16(3):289–326
Odugbesan, J. A., & Adebayo, T. S. (2020a). Modeling CO2 emissions in
South Africa: empirical evidence from ARDL based bounds and
wavelet coherence techniques. Environmental Science and
Pollution Research, 1-13.
Odugbesan JA, Adebayo TS (2020b) The symmetrical and asymmetrical
effects of foreign direct investment and financial development on
carbon emission: evidence from Nigeria. SN Applied Sciences
2(12):1–15
Odhiambo NM (2009) Energy consumption and economic growth nexus
in Tanzania: An ARDL bounds testing approach. Energy Policy
37(2):617–622
Onjala J, K'Akumu OA (2016) Relational patterns of urbanisation and
economic growth in sub-Saharan Africa. Dev South Afr 33(2):234–
246
Olimpia, N., & Stela, D. (2017). Impact of Globalisation on Economic
Growth in Romania: An Empirical Analysis of Its Economic, Social
and Political Dimensions. Studia Universitatis "Vasile Goldis”
Arad–Economics Series, 27(1), 29-40.
Ouyang Y, Li P (2018) On the nexus of financial development, economic
growth, and energy consumption in China: New perspective from a
GMM panel VAR approach. Energy Econ 71:238–252
View publication stats
Environ Sci Pollut Res
Onyibor K, Akinsola GD, Adebayo TS (2020) The impact of major
macroeconomic variables on foreign direct investment in Nigeria:
evidence from a wavelet coherence technique. SN Bus Econ 1(1):1–
24
Panayotou T (1997) Demystifying the environmental Kuznets curve:
turning a black box into a policy tool. Environ Dev Econ 2:465–484
Phillips PC, Perron P (1988) Testing for a unit root in time series regres-
sion. Biometrika 75(2):335–346
Udemba, E. N., Güngör, H., Bekun, F. V., & Kirikkaleli, D. (2020).
Economic performance of India amidst high CO2 emissions.
Sustainable Production and Consumption.
Umar M, Ji X, Kirikkaleli D, Xu Q (2020) COP21 Roadmap: Do inno-
vation, financial development, and transportation infrastructure mat-
ter for environmental sustainability in China? J Environ Manag 271:
111026
Pata UK (2018) Renewable energy consumption, urbanization, financial
development, income and CO2 emissions in Turkey: testing EKC
hypothesis with structural breaks. J Clean Prod 187:770–779
Rana R, Sharma M (2019) International trade, foreign direct investment,
economic growth and CO2 emissions: a study of India. Interdiscip
Environ Rev 20(1):73–82
Rafindadi AA, Ozturk I (2016) Effects of financial development, eco-
nomic growth and trade on electricity consumption: Evidence from
post-Fukushima Japan. Renew Sust Energ Rev 54:1073–1084
Raghutla, C. (2020). The effect of trade openness on economic growth:
Some empirical evidence from emerging market economies J Public
Affairs, e2081.
Sarkodie SA, Strezov V (2018) Empirical study of the environmental
Kuznets curve and environmental sustainability curve hypothesis
for Australia, China, Ghana and USA. J Clean Prod 201:98–110
Saboori B, Rasoulinezhad E, Sung J (2017) The nexus of oil consump-
tion, CO 2 emissions and economic growth in China, Japan and
South Korea. Environ Sci Pollut Res 24(8):7436–7455
Shahbaz M, Zakaria M, Shahzad SJH, Mahalik MK (2018) The energy
consumption and economic growth nexus in top ten energy-
consuming countries: Fresh evidence from using the quantile-on-
quantile approach. Energy Econ 71:282–301
Shittu WO, Yusuf HA, El Houssein AEM, Hassan S (2020) The impacts
of foreign direct investment and globalisation on economic growth
in West Africa: examining the role of political governance. J Econ
Stud 47:1733–1755
Saidi K, Hammami S (2015) The impact of CO2 emissions and economic
growth on energy consumption in 58 countries. Energy Rep 1:62–70
Tamang P (2013) Urbanisation and economic growth: Investigating cau-
sality. Econometrics 1(3):41–47
Torrence C, Compo GP (1998) A practical guide to wavelet analysis. Bull
Am Meteorol Soc 79(1):61–78
World Bank (2020) World Development Indicators.http://data.
worldbank.org/country. Accessed 12 January 2020.
Zivot E, Andrews DWK (2002) Further evidence on the great crash, the
oil-price shock, and the unit-root hypothesis. J Bus Econ Stat 20(1):
25–44
Publisher’s note Springer Nature remains neutral with regard to jurisdic-
tional claims in published maps and institutional affiliations.