Investigating factors affecting global environmental sustainability: evidence from nonlinear ARDL bounds test

Abstract

The concept of environmental sustainability formed the basis of the Paris Agreement and the United Nations conference in Rio de Janeiro. Empirically, without environmental sustainability, everything else could fall apart or be aimless. This study investigates factors affecting global environmental sustainability spanning 1966Q1 to 2019Q4. However, there are many micro-/macroeconomic factors engendering the environment, and the absence of robust clarity on whether factors such as economic growth, urbanization, trade openness, and energy consumption matter for global environmental sustainability remains a global academic dilemma in the economics literature. This paper utilized the unrestricted nonlinear autoregressive distributed lag (NARDL) bounds test techniques to model their relationship. Furthermore, the study adopted fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS), and canonical cointegrating regression (CCR) methods to test the research hypothesis, catering to the problem of endogeneity and serial correlation. Up-to-date of this study, no empirical study has examined the nexus of these variables within the global framework. The outcomes suggested that (i) NARDL bounds test of cointegration confirmed evidence of long-run and short-run relationships among the variables; (ii) long-run asymmetric relationship was affirmed among the variables; and (iii) DOLS, FMOLS, and CCR models demonstrate that economic growth, energy consumption, and trade openness are positively significantly correlated with environmental sustainability except for economic growth which shows negative and insignificant correlation. These findings validate the protracted argument in literature that these estimated variables are significant for global environmental sustainability. This study recommends that environmental policymakers integrate global economic incentives with favorable regulatory changes for achieving the goals of a global sustainable environment in the long-run equilibrium.

Energy productivity and environmental quality in Sweden: Evidence from Fourier and non‐linear based approaches

“…It has set a goal of becoming carbon neutral by 2030 (Zhao et al, 2022). Current literature on the open economy and large industrial nations as a core determinant of the increase in greenhouse gas emissions is critical (Kirikkaleli & Oyebanji, 2022; Sowah & Kirikkaleli, 2022). It has become increasingly important for economists and policymakers to understand the impact of globalization, financial development, economic growth, energy consumption, and diffusion in a carbon‐intensive country such as Sweden.…”

“…Further, Fourier ADL cointegration analysis was used to capture the effects of the unknown number and non‐linear structural breaks. To determine whether variables have a causal relationship, we use the frequency domain causality test, followed by several econometric robustness tests, including Brown et al's (1975) cumulative stability test, the Breusch–Pagan–Godfrey, and Breusch–Pagan–Godfrey serial correlation LM tests (Sowah & Kirikkaleli, 2022). To our knowledge, these relatively recent and robust methodologies have not been implemented in such a context in Sweden.…”