The effects of stock market growth and renewable energy use on CO2 emissions

Evidence from G20 countries

Sudharshan Reddy Paramati, Di Mo, Rakesh Gupta (Lead / Corresponding author)

    Research output: Contribution to journalArticle

    29 Citations (Scopus)

    Abstract

    The primary objective of this study is to empirically examine the effect of stock market growth and foreign direct investment (FDI) inflows on CO2 emissions. Further, this study investigates the impact of renewable energy consumption on CO2 emissions and economic output in a panel of the G20 countries. The empirical analysis was carried out on the full sample as well as on sub-samples of developed and developing economies of the G20 member countries. The results confirm a significant long-run equilibrium relationship among the variables across the panels. Further, the long-run elasticities suggest that FDI significantly reduces CO2 emissions in the full sample and developing economies while stock market growth reduces in developed economies. Similarly, the renewable energy consumption substantially reduces CO2 emissions and increases economic output across the panels. Our findings have important policy implications. For instance, the policy makers have to initiate effective policies to promote the renewable energy sources to meet the increasing demand for energy by replacing the use of conventional energy such as coal, gas and oil. This will therefore help to reduce the CO2 emissions and also ensure sustainable economic development in the G20 nations.

    Original languageEnglish
    Pages (from-to)360-371
    Number of pages12
    JournalEnergy Economics
    Volume66
    Early online date6 Jul 2017
    DOIs
    Publication statusPublished - Aug 2017

    Fingerprint

    Energy utilization
    Coal gas
    Economics
    Sustainable development
    Elasticity
    Financial markets
    CO2 emissions
    Stock market
    Renewable energy
    Energy use
    Oils
    Foreign direct investment
    Energy consumption
    Developing economies
    Energy

    Keywords

    • CO2 emissions
    • FDI inflows
    • G20 nations
    • Renewable energy
    • Stock market growth

    Cite this

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    abstract = "The primary objective of this study is to empirically examine the effect of stock market growth and foreign direct investment (FDI) inflows on CO2 emissions. Further, this study investigates the impact of renewable energy consumption on CO2 emissions and economic output in a panel of the G20 countries. The empirical analysis was carried out on the full sample as well as on sub-samples of developed and developing economies of the G20 member countries. The results confirm a significant long-run equilibrium relationship among the variables across the panels. Further, the long-run elasticities suggest that FDI significantly reduces CO2 emissions in the full sample and developing economies while stock market growth reduces in developed economies. Similarly, the renewable energy consumption substantially reduces CO2 emissions and increases economic output across the panels. Our findings have important policy implications. For instance, the policy makers have to initiate effective policies to promote the renewable energy sources to meet the increasing demand for energy by replacing the use of conventional energy such as coal, gas and oil. This will therefore help to reduce the CO2 emissions and also ensure sustainable economic development in the G20 nations.",
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    author = "Paramati, {Sudharshan Reddy} and Di Mo and Rakesh Gupta",
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    The effects of stock market growth and renewable energy use on CO2 emissions : Evidence from G20 countries. / Paramati, Sudharshan Reddy; Mo, Di; Gupta, Rakesh (Lead / Corresponding author).

    In: Energy Economics, Vol. 66, 08.2017, p. 360-371.

    Research output: Contribution to journalArticle

    TY - JOUR

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    AU - Mo, Di

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    AB - The primary objective of this study is to empirically examine the effect of stock market growth and foreign direct investment (FDI) inflows on CO2 emissions. Further, this study investigates the impact of renewable energy consumption on CO2 emissions and economic output in a panel of the G20 countries. The empirical analysis was carried out on the full sample as well as on sub-samples of developed and developing economies of the G20 member countries. The results confirm a significant long-run equilibrium relationship among the variables across the panels. Further, the long-run elasticities suggest that FDI significantly reduces CO2 emissions in the full sample and developing economies while stock market growth reduces in developed economies. Similarly, the renewable energy consumption substantially reduces CO2 emissions and increases economic output across the panels. Our findings have important policy implications. For instance, the policy makers have to initiate effective policies to promote the renewable energy sources to meet the increasing demand for energy by replacing the use of conventional energy such as coal, gas and oil. This will therefore help to reduce the CO2 emissions and also ensure sustainable economic development in the G20 nations.

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