Ensuring environment sustainability through natural resources, renewable energy consumption, and inflation dynamics

Wei Ma, Tong Wu, Sebastian-Emanuel Stan and Bin Gao

Resources Policy, 2024, vol. 90, issue C

Abstract: The legislation known as the Inflation Reduction Act (IRA) proposes to direct resources toward renewable energy initiatives to decrease the United States' dependence on an international economy largely steered by fossil fuels and manipulated by countries not in agreement with American principles. The USA, rich in natural resources (NTR), has a crucial role in propelling environmental sustainability (ENV) - a fundamental aspect for successfully executing the IRA's objectives. There is also a risk of a surge in inflation (INF) when heavy investments are undertaken. Hence, one of the IRA's purposes is to control the rise in INF within the country's economy. This investigation thus explores the interconnections among three primary elements, NTR, Consumption of Renewable Energy (REC), and INF, in the context of ENV. To decipher these associations while nullifying the impact of short-term and long-term fluctuations in the time series data, the study employs the Asymmetric (nonlinear) Autoregressive Distributed Lag (ARDL) model. The research outcomes suggest that positive variations in NTR lead to a growth in CO2 emissions, while negative variations in NTR result in a reduction in CO2 emissions. Similarly, positive changes in REC and INF lead to decreased CO2 emissions, whereas negative changes in REC and INF stimulate increased CO2 emissions. These insights bear profound implications for the IRA, which aligns with boosting investments in REC, lowering dependence on NTR, and managing INF.

Keywords: Inflation reduction act; Natural resources; Renewable energy consumption; Inflation; Environment sustainability; NARDL (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:90:y:2024:i:c:s0301420724000436

DOI: 10.1016/j.resourpol.2024.104676

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