Modelling the effect of energy consumption on different environmental indicators in the United States: The role of financial development and renewable energy innovations

Abstract

This study offers new insights into the relationship between energy consumption and environmental degradation in the United States by controlling for financial development, renewable energy innovations, economic expansion, and trade policy uncertainty over the period 1985:Q1 to 2014:Q4. Based on the flexible autoregressive distributed lag model, our findings show that energy consumption deteriorates the environment, while renewable energy innovations reduce CO2 emissions but has no significant effect on ecological footprint. Furthermore, the environmental Kuznets curve hypothesis is valid only when ecological footprint is used as an environmental indicator. The causality results establish a feedback effect between CO2 emissions and renewable energy innovations, a unidirectional causal flow from financial development to CO2 emissions, energy consumption, and economic growth. Also discovered is a unidirectional causal flow from the ecological footprint to energy use and economic growth, and from renewable energy innovations and energy consumption to economic growth. Therefore, the policy implications for this study, among others, include the provision of grants and subsidies for research in renewable energy to enhance sustainable environmental quality.

Financial development, ecological transition, and economic growth in Sub-Saharan African countries: the performing role of the quality of institutions and human capital

“…Inflation worsens the financial system as predicted by most theories. These findings are consistent with Lahiani et al (2021), Lu et al (2021), and Usman et al (2021) in America and Zhe et al (2021) in Europe. Completing the analysis of previous models, we found evidence of a bilateral causality between economic growth and financial development in Sub-Saharan Africa.…”

“…Among the kinds of clean technologies, renewable energies (hydro, wind, solar, biomass, geothermal, ocean) constitute an inexhaustible energy resource, but to achieve the transformation, large-scale investments are crucial, therefore creating the theoretical investment-ecology-growth loop. Four hypotheses have been established: (i) the growth hypothesis stating that energy consumption through the production process improves economic growth (Odugbesan and Rjoub 2020; Zhe et al 2021;Usman et al 2021), (ii) the conservation hypothesis reporting that economic growth leads to an increase or decrease in energy demand (Gaies et al 2019;Shahbaz et al 2021), (iii) the feedback hypothesis formulating that there is a bidirectional causality between growth and energy consumption (Aimer 2020), (iv) and the neutrality hypothesis saying that there is no link (Maji et al 2019).…”

“…Macroeconomic factors such as capital, government expenditure, and human capital are a precondition for infrastructure development, promoting financial development (Nkalu et al 2020). Recent research also emphasizes the role of energy and the flows of merchandise trade as catalysts for financial development (Shahbaz et al 2021;Lu et al 2021;Usman et al 2021). Therefore, the third equation with financial development as dependent variable is presented as follows:…”

Examining the sustainable development approach of migrants' remittances and financial development in sub‐Saharan African countries

“…Specifically, the study revealed that financial inclusion is a significant agent of carbon mitigation in the 25th and 50th quantiles but the impact remained unexplainable in the last two quantiles (75th and 90th). Moreover, Usman et al (2021) checked for the role of renewable energy innovations and financial development in improving the ecological footprint amid other factors for the case of the United States by using the quarterly period 1985: Q1‐2014: Q4. Interestingly, the findings showed that the desirable environmental effect of financial development on ecological footprint only happens when threshold of development in the financial system is attained while such occurrence is not observed with the carbon dioxide model.…”

“…For developing countries, they found a positive impact of remittances on household credit in the long term but no impact in the short term. In addition, following a sustainable development approach, other recent studies that have examined the link between remittancesrelated factors and environment quality (Qin et al, 2021;Zafar et al, 2021) and financial development (as a holistic proxy to capture all financial factors that include remittances) in an environmental framework (Kihombo et al, 2021;Usman et al, 2021;Wang et al, 2021). Specifically, Zafar et al (2021) explored the case of 22 world highest remittance-receiving countries to examine the link between remittances (as a proxy for financial development), export diversification, economic growth, education, energy variable, and carbon emission over the period 1986-2017.…”