The influence of income, economic policy uncertainty, geopolitical risk, and urbanization on renewable energy investments in G7 countries

Ugur Korkut Pata, Andrew Adewale Alola, Sinan Erdogan and Mustafa Tevfik Kartal

Energy Economics, 2023, vol. 128, issue C

Abstract: Renewable energy infrastructure development is seen as critical to solving environmental issues. Nevertheless, researchers have not adequately paid attention to how the socioeconomic and geopolitical environment affects renewable energy investments (REINV), which are important for promoting clean energy. In line with this gap, this research aims to analyze the role of economic policy uncertainty (EPU) and geopolitical risk (GPR), as well as controlling economic growth (GDP) and urbanization (URB) in G7 countries by considering their leading role in both economic and political areas. To this end, the study applies the augmented mean group (AMG) approach by constructing three different models for the period 2004–2018. The panel data results reveal that (i) GDP has a significantly increasing effect on REINV; (ii) EPU, GPR, and URB have a decreasing effect on REINV; (iii) the effect of EPU is much stronger than that of GPR; (iv) institutional structure, represented by government efficiency and regulatory quality, has no effect on REINV. Based on the results, the study points out that G7 countries need to promote transmission mechanisms that encourage REINV and take steps to minimize the negative effect of EPU and GPR on clean energy investments.

Keywords: Renewable energy investments; Economic policy uncertainty; Geopolitical risk; G7 countries; AMG (search for similar items in EconPapers)
JEL-codes: C33 D80 Q42 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:128:y:2023:i:c:s0140988323006709

DOI: 10.1016/j.eneco.2023.107172

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