Environmental Pollution and Disaggregated Economic Policy Uncertainty: Evidence from Japan

Abstract

Though, the attention of researchers on exploring the impact of economic policy uncertainty on carbon emissions is on increase, however, the impact of different types of economic policy uncertainty remains unexplored. Thus, this study investigates the impact of different types of economic policy uncertainty on carbon emissions in Japan. A monthly data from 1987M1 to 2019M12 was used, while the FMOLS, DOLS, CCR and ARDL estimators were employed for examining the cointegration among the variables, as well as the long- and short-run relationship between types of economic policy uncertainty and carbon emissions. The study findings revealed a long-run cointegration among energy consumption, per capita income, fiscal, exchange rate, monetary, and trade policy uncertainties and carbon emissions. Moreover, this study found energy consumption, exchange rate, monetary, and trade policy uncertainties to contribute significantly to the increase of carbon emissions in Japan. Finally, this study suggests that environmental policy makers in Japan should take into account the economic policy uncertainty so as to promote robust information for climate policy that will be targeted at ameliorating the carbon emissions in Japan.