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There is growing global concern about the unpredictable nature of climate change and rapid ecological degradation, which has emanated from quest to enhance economic growth in many parts of the world. In spite of the potential offered by green energy, developing economies such as Nigeria are lagging behind in the application of renewable energy. The synergic impact of climate change, ecological degradation and some key macroeconomic variables remains partially unexplored. Considering this gap in the literature, the objective of the study is to examine the impact of climatic change, ecological degradation, population growth and energy consumption on economic growth in Nigeria. The dynamic impacts of these key variables were analyzed using the Autoregressive Distributed Lag model. While the bounds test results indicated that the variables are co-integrated, bidirectional causal flows were identified between economic growth, energy consumption, population growth, and climatic change. However, unidirectional relations exist running from ecological degradation to economic growth, as well as from population to economic growth. The study further found that climate change and ecological degradation are mutually reinforcing one another as a bidirectional causal relation was detected among the two variables. In this sense, it can be concluded that population growth, energy consumption, and ecological degradation are key contributors to sustainable growth that will reduce the threat of climate change. As such, there is a strong need for Nigeria to strengthen its environmental regulatory institutions to initiate a paradigm shift from conventional to renewable energy. This will reduce ecological degradation and enhance environmentally-friendly economic growth.

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PurposeIn spite of the certain risk imposed by financial stress on the real economy, the relationship between financial stress and economic activity is complicated and underresearched, meaning that important gaps still remain in the authors’ understanding of this critical relationship. Therefore, the current study aims to answer the significant question regarding whether a stressful financial sector has predictive power on the real sector and vice versa. Hence, the study examines the causal interrelationship between financial stress index (FSI) and economic activity in Luxembourg as a sample country.Design/methodology/approachIn this study, accompanying the time domain Granger causality framework of Hacker and Hatemi-J (2012), the authors utilize the spectral causality technique of Breitung and Candelon (2006), which is based on the study of Geweke (1982) and Hosoya (1991). This method enables the researcher to measure the degree of a particular variation in time series. Moreover, it allows considering the nonlinearities and causality cycles. The authors further apply the recent method of Farné and Montanari (2018) that is a bootstrap framework on Granger-causality spectra, which allows for disambiguation in causalities.FindingsThe time-domain approach finds evidence of bidirectional causation between the variables. However, the spectral causality results indicate the causal linkages between the series are only valid under the medium-run frequency. This study’s findings emphasize covering the frequency causality to deliver a more comprehensive picture of the interrelationship between the variables.Originality/valueThere are many studies in this area that examine the nexus between financial stress and economic activity. However, the authors believe this paper is the first study in the context of Luxemburg. The authors focus on this country since its financial sector is designated as the most important pillar for the economy. Thus, a careful and reliable examination of the relationship between the financial sector and economic activity is likely to be of considerable interest to policymakers and researchers in this field.