Green Financing Strategies and Policy Interventions: Driving Sustainable Development in Europe’s Largest Economies

Xiaohong Li (), Xinyu Wang (), Abdur Rauf (), Sardar Fawad Saleem () and Teodora Odett Breaz ()
Additional contact information
Xiaohong Li: School of Economics and Finance, Xi'an Jiaotong University, Xi'an 710049, P. R. China.
Xinyu Wang: School of Economics and Management, North China University of Technology, Beijing 100144, China.
Abdur Rauf: Department of Economics, University of Science & Technology, Bannu, Pakistan.
Sardar Fawad Saleem: Department of Economics, Abbottabad University of Science and Technology, Pakistan.
Teodora Odett Breaz: “1 Decembrie 1918” University of Alba Iulia.

Journal for Economic Forecasting, 2024, issue 3, 161-178

Abstract: The Target of the world is that economic growth must be sustainable, ensuring optimized production and reduced emissions. This study examines the impact of green financing strategies, including MPT (Industrial green innovation), IMPT (Eco-tech imports), GFN (Green investment), MTW (Water and wastewater-related green technologies), and MTE (Energy-related green technologies). It also estimated the impact of policy interventions, such as EPY (Environmental policy) and ETX (Environmental taxes), on production-based emissions (PBE), industrial value addition (IVA), and sustainable development goals (SDG). The analysis focuses on the data of 9 largest economies of Europe, which contributed 83% of total EU GDP from 2000 to 2022. The CIPS test is used to evaluate unit roots, and 2nd generation tests are applied to evaluate cross-sectional dependence. Furthermore, to estimate the parameters, we used the Pooled Augmented Mean Group (AMGE) estimator and The Common Correlated Effects Mean Group (CCEMG) estimator. The Bootstrap Granger Causality test is also applied. The results affirm that all the green financing strategies and policy interventions that were considered mitigated PBE and increased the IVA and SDG in Europe. Notably, the impact of green investment mitigation is prominent. Therefore, European policymakers should expand investment in green technologies and sustainable practices across all sectors. For this purpose, government intervention in the form of environmental policies and environmental taxes is also recommended. This will ensure continued mitigation of pollution and progress toward Sustainable Development Goals in Europe

Keywords: Green financing strategies; Policy interventions; Production-based emissions; Industrial value addition; Sustainable Development Goals; Europe (search for similar items in EconPapers)
JEL-codes: C33 O13 Q01 Q55 Q56 Q58 (search for similar items in EconPapers)
Date: 2024
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