The role of globalization, real income, tourism in environmental sustainability target. Evidence from Turkey

Abstract

In this study, we examine the role of real income, globalization and tourism on environmental sustainability target by applying Autoregressive Distributed Lag (ARDL) bounds testing approach that controls for structural breaks and Vector Error Correction Model (VECM) Granger causality approach that produces robust, efficient and reliable short-run and long-run estimates in the case of Turkey over the periods 1970-2014. To achieve our research objective, we examine stationarity properties of the series via unit root test after which we applied Bayer-Hanck combined cointegration technique to evaluate the presence of a long-run cointegration relationship among the series. The empirical results show that a 1% increase in real income level and international tourists' arrivals led to 0.625% and 0.129% increase in metric ton per capita CO2 emissions in the short-run and 0.345% and 0.071% increase in metric tons per capita CO2 emissions in the long-run, while globalization has non-significant negative impacts on CO2 emissions. The causality analysis suggest that tourism Granger causes CO2 emissions both in the short- and long-run, while real income and globalization only Granger cause CO2 emissions in the long-run. Findings also show that a one standard deviation shock to CO2 emissions has a noticeable positive and persistent impact on tourism, globalization and economic growth in the long-run.