Examining the impact of electricity production on economic growth and environmental quality in Japan: a disaggregated level analysis.

For accelerating economic growth, the role of electricity production and consumption is undeniable. Thus, the economic growth aspect of electricity consumption has already been well established in the literature. However, the attainment of sustainable economic growth has become an important concern for most countries; mere focus on electricity consumption on economic growth is not sufficient. As a result, impact of electricity production from various sources on economic growth and environmental quality needs to be explore in detail to give direction towards sustainable economic growth. Hence, this study aims to evaluate the impact of electricity production from various sources on Japan's economic growth and environmental quality, spanning from 1966 to 2014. The study used the ARDL bounds testing approach of cointegration to establish the long-run relationship between the variables under consideration. The outcomes emanated from the bound test show the presence of a long-run relationship among the studied variables. Furthermore, the ARDL-based long-run result indicates that electricity generation from coal is not viable for the economy and environment, whereas electricity production from hydro, natural gas, nuclear, and oil sources is found to be viable since it improves the economy and environmental quality in Japan. The robustness of the long-run results is further confirmed by using the fully modified OLS (FMOLS). Therefore, policy formulation related to electricity generation in Japan has to be taken care of both the economic growth and environmental quality angle. Furthermore, the measures for curbing coal based electricity needs to give profound significance while making electricity policy in Japan.