The effects of stock market growth and renewable energy use on CO2 emissions: Evidence from G20 countries

Sudharshan Reddy Paramati, Di Mo and Rakesh Gupta

Energy Economics, 2017, vol. 66, issue C, 360-371

Abstract: The primary objective of this study is to empirically examine the effect of stock market growth and foreign direct investment (FDI) inflows on CO2 emissions. Further, this study investigates the impact of renewable energy consumption on CO2 emissions and economic output in a panel of the G20 countries. The empirical analysis was carried out on the full sample as well as on sub-samples of developed and developing economies of the G20 member countries. The results confirm a significant long-run equilibrium relationship among the variables across the panels. Further, the long-run elasticities suggest that FDI significantly reduces CO2 emissions in the full sample and developing economies while stock market growth reduces in developed economies. Similarly, the renewable energy consumption substantially reduces CO2 emissions and increases economic output across the panels. Our findings have important policy implications. For instance, the policy makers have to initiate effective policies to promote the renewable energy sources to meet the increasing demand for energy by replacing the use of conventional energy such as coal, gas and oil. This will therefore help to reduce the CO2 emissions and also ensure sustainable economic development in the G20 nations.

Keywords: CO2 emissions; FDI inflows; Stock market growth; Renewable energy; G20 nations (search for similar items in EconPapers)
JEL-codes: F21 O16 P28 Q42 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (127)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:66:y:2017:i:c:p:360-371

DOI: 10.1016/j.eneco.2017.06.025

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