Does Increasing Environmental Policy Stringency Enhance Renewable Energy Consumption in OECD Countries?

M. Hassan (), M. Kouzez, J. Y. Lee (), B. Msolli and H. Rjibae
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J. Y. Lee: Audencia Business School

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Abstract: This study explores the impact of environmental policy stringency on GDP per capita in 34 OECD countries over the period 1990 to 2019, using the Instrumental Variables with two-Stage Least Squares IV (2SLS) approach. We test the robustness of the empirical results by the two-step generalized method of moments, the fixed effects with Driscoll-Kraay standard errors and the mixed-effect maximum-likelihood estimator. Data were analyzed using different tests, including cross-section dependence, second-generation panel unit root tests, and endogeneity test. Unlike the previous studies that showed a negative impact of environmental regulations on economic growth, our results suggest that a more strict environmental policy can increase the GDP per capita in the OECD zone in the short term. Based on this findings, relevant policy recommendations are proposed.

Keywords: Environmental Regulations; Economic Growth; instrumental variables with two-stage least squares approach; two-step generalized method of moments (search for similar items in EconPapers)
Date: 2024-01
Note: View the original document on HAL open archive server: https://hal.science/hal-04350282v2
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Citations: View citations in EconPapers (7)

Published in Energy economics, 2024, 129 (January 2024), ⟨10.1016/j.eneco.2023.107198⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04350282

DOI: 10.1016/j.eneco.2023.107198

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