Dynamic and casual association between green investment, clean energy and environmental sustainability using advance quantile A.R.D.L. framework

Yunpeng Sun, Haoning Li, Kun Zhang and Hafiz Waqas Kamran

Economic Research-Ekonomska Istraživanja, 2022, vol. 35, issue 1, 3609-3628

Abstract: This study examines the dynamic and causal relationship between green investment (G.I.), clean energy (C.E.), economic growth, and environmental sustainability with the help of an innovative approach named as quantile autoregressive distributed lagged (Q.A.R.D.L.) model using quarterly data from Q1-1995 to Q4-2019 for China. Our preliminary findings confirm data non-normality and structural breaks in all data series. Therefore, we have applied Q.A.R.D.L. that efficiently deals with these issues. We have further applied the Granger-causality in quantiles to check the causal association among the variables of interest. The findings through Q.A.R.D.L. estimation confirm that the error correction parameter is statistically significant with expected negative sign across major quantiles. In the long run, the results confirm that both C.E., and G.I. are significant mitigants of environmental pollution, however their emissions mitigating effects varies across lower, middle, and higher emissions quantiles. Furthermore, the findings through Granger-causality test confirm the existence of two-way causality between G.I., C.E., and carbon emissions across all quantiles. These results offer valuable policy implications.

Date: 2022
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DOI: 10.1080/1331677X.2021.1997627

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