Does Financial Openness Expand the Renewable Energy Investment in Latin American Countries?

Matheus Koengkan () and José Alberto Fuinhas ()
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Matheus Koengkan: University of Aveiro

Chapter Chapter 3 in Globalisation and Energy Transition in Latin America and the Caribbean, 2022, pp 27-61 from Springer

Abstract: Abstract This chapter investigates the impact of financial openness on renewable energy investment in Latin American countries from 1980 to 2014. A panel autoregressive distributed lags (PARDL) model in the form of an unrestricted error correction model (UECM) is estimated, and robustness checks and causality analysis are performed with a panel vector autoregression (PVAR) model and a panel Granger causality Wald test. The PARDL estimates indicate that financial openness has a positive long-run impact on renewable energy investment, proxied by the installed capacity of renewable energy. Such investment is also positively affected by per capita economic growth (in the short run) and per capita general government’s capital stock (in the long run). The robustness assessment confirms positive causalities between per capita economic growth, financial openness, and per capita general government capital stock. Furthermore, the results of the Granger causality analysis indicate that bidirectional Granger causal links exist between all the variables in the model.

Keywords: Energy economics; Econometrics; Financial openness; Investment; Renewable energy; Latin America; F40; F62; Q43 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-13885-0_3

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DOI: 10.1007/978-3-031-13885-0_3

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