The Impact of Energy Intensity, Renewable Energy, and Financial Development on Green Growth in OECD Countries: Fresh Evidence Under Environmental Policy Stringency
Abstract
:1. Introduction
2. Literature Review and Hypothesis Development
2.1. Financial Development and Green Growth
2.2. Energy Intensity and Green Growth
2.3. Renewable Energy and Green Growth
2.4. Environmental Policy Stringency and Green Growth
2.5. Research Gap
3. Data, Model Construction, and Methodology
3.1. Data
3.2. Model Construction
3.3. Methodology
3.3.1. Cross-Sectional Dependency
3.3.2. Slope Heterogeneity
3.3.3. Unit Root Tests
3.3.4. Panel Cointegration Tests
3.3.5. Fully Modified Ordinary Least Squares (FMOLS)
4. Empirical Results
Pre-Test Results
5. Discussion
6. Conclusions and Policy Recommendations
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
References
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Variable | Variable Symbol | Variable Definitions | Source |
---|---|---|---|
Green growth | GG | GG index calculated by PCA analysis based on the dimensions of economic growth, educational, health expenditures, CO2 emissions, net forest, and mineral depletions. | WB |
Financial development | FD | Financial Development Index | IMF |
Energy intensity | EI | Primary energy consumption per GDP | Our World |
Renewable energy | RNW | Renewable energy consumption (% of total final energy consumption) | WB |
Environmental policy | EPS | Environmental Policy Stringency Index | OECD |
Trade openness | TO | Trade (% of GDP) | WB |
Green technology | GT | Development of environment-related technologies Index | OECD |
Economic complexity | ECI | Economic Complexity Index | OEC |
Elemental Indicators of GG | Symbol | Basic Indicators | Source |
Economic growth | GDP | Gross domestic product growth (% annual) | WB |
Education | EDU | School enrollment, secondary (% gross) | WB |
Health | HE | Current health expenditure (% of GDP) | WB |
CO2 Emissions | CO2 | Carbon dioxide (CO2) emissions excluding LULUCF per capita (t CO2e/capita) | WB |
Net Forest | NF | Adjusted savings: net forest depletion (% of GNI) | WB |
Net Mineral | NM | Adjusted savings: mineral depletion (% of GNI) | WB |
Box Plots | ||||||||
---|---|---|---|---|---|---|---|---|
Stats. | GG | FD | RNW | EI | EPS | TO | GT | ECI |
Mean | 114.000 | −0.435 | 2.572 | 0.284 | 0.938 | 4.488 | 0.002 | 0.115 |
Median | 109.776 | −0.362 | 2.721 | 0.272 | 1.051 | 4.396 | 0.014 | 0.281 |
Max. | 167.260 | −0.003 | 4.117 | 1.165 | 1.587 | 5.522 | 0.763 | 0.719 |
Min. | 85.839 | −1.611 | −0.357 | −0.657 | −1.186 | 3.784 | −1.178 | −2.214 |
Std. Dev. | 16.994 | 0.302 | 0.947 | 0.342 | 0.442 | 0.398 | 0.271 | 0.525 |
Skewness | 1.153 | −1.397 | −0.810 | 0.037 | −2.157 | 0.476 | −0.254 | −1.763 |
Kurtosis | 3.802 | 4.870 | 3.553 | 2.930 | 9.214 | 2.179 | 4.341 | 6.104 |
J-B | 137.1 *** | 260.1 *** | 67.340 *** | 0.239 *** | 1316.2 *** | 36.306 *** | 47.277 *** | 507.6 *** |
Obs. | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 |
Scatters plots |
1/VIF | VIF | GG | 1.000 | 0.095 | 0.291 | −0.223 | 0.169 | 0.094 | −0.139 | −0.132 |
---|---|---|---|---|---|---|---|---|---|---|
0.599 | 1.669 | FD | 0.095 | 1.000 | −0.071 | −0.244 | 0.271 | −0.322 | −0.124 | 0.274 |
0.874 | 1.144 | RNW | 0.291 | −0.071 | 1.000 | −0.132 | 0.290 | −0.093 | 0.169 | −0.071 |
0.722 | 1.385 | EI | −0.223 | −0.244 | −0.132 | 1.000 | −0.375 | −0.063 | 0.140 | −0.137 |
0.600 | 1.668 | EPS | 0.169 | 0.271 | 0.290 | −0.375 | 1.000 | 0.143 | 0.158 | 0.350 |
0.580 | 1.723 | TO | 0.094 | −0.322 | −0.093 | −0.063 | 0.143 | 1.000 | −0.130 | 0.262 |
0.783 | 1.276 | GT | −0.139 | −0.124 | 0.169 | 0.140 | 0.158 | −0.130 | 1.000 | −0.054 |
0.701 | 1.426 | ECI | −0.132 | 0.274 | −0.071 | −0.137 | 0.350 | 0.262 | −0.054 | 1.000 |
Mean VIF | (1.470) | GG | FD | RNW | EI | EPS | TO | GT | ECI |
Block Exogenous Wald Test. | |||
---|---|---|---|
Hypothesis—H0: Exogenous | Chi-sq | Prob. | |
FD | RNW | 1.843 | 0.606 |
EI | 0.992 | 0.803 | |
EPS | 5.675 | 0.129 | |
TO | 1.154 | 0.764 | |
GT | 2.948 | 0.400 | |
ECI | 5.959 | 0.114 | |
RNW | FD | 1.616 | 0.656 |
EI | 4.898 | 0.179 | |
EPS | 6.075 | 0.108 | |
TO | 3.405 | 0.333 | |
GT | 5.619 | 0.132 | |
ECI | 2.622 | 0.454 | |
EI | FD | 0.064 | 0.800 |
RNW | 0.001 | 0.970 | |
EPS | 0.006 | 0.938 | |
TO | 0.890 | 0.345 | |
GT | 0.162 | 0.688 | |
ECI | 0.026 | 0.871 | |
EPS | FD | 0.001 | 0.980 |
RNW | 0.005 | 0.946 | |
EI | 3.508 | 0.061 | |
TO | 3.031 | 0.082 | |
GT | 0.100 | 0.752 | |
ECI | 0.769 | 0.381 | |
TO | FD | 0.116 | 0.733 |
RNW | 0.140 | 0.709 | |
EI | 0.052 | 0.820 | |
EPS | 0.002 | 0.965 | |
GT | 0.174 | 0.677 | |
ECI | 0.650 | 0.420 | |
GT | FD | 1.039 | 0.308 |
RNW | 0.127 | 0.722 | |
EI | 1.340 | 0.247 | |
EPS | 0.387 | 0.534 | |
TO | 0.241 | 0.624 | |
ECI | 1.037 | 0.309 | |
ECI | FD | 1.608 | 0.205 |
RNW | 0.581 | 0.446 | |
EI | 0.025 | 0.875 | |
EPS | 0.021 | 0.885 | |
TO | 0.658 | 0.417 | |
GT | 0.001 | 0.974 | |
Sargan–Hansen Test | |||
Instrument specification: | Instrument | Sargan–Hansen J stat. | Prob(J-stat.) |
@DYN(GG,-2) FD(-1) RNW(-1) EI(-1) EPS(-1) TO(-1) GT(-1) ECI(-1) | Model A | 21.305 | 0.127 |
@DYN(GG,-2) FD(-1) RNW(-1) EI(-1) EPS(-1) TO(-1) GT(-1) ECI(-1) EPS*FD(-1) | Model B | 18.972 | 0.165 |
H0: The instruments are valid |
Variable | Bias-Cor. Scaled LM | Delta Tests | ||||
---|---|---|---|---|---|---|
Stat. | Prob. | Prob. | Prob. | |||
GG | −2.960 | 0.998 | 6.004 | 0.000 | 6.419 | 0.000 |
FD | −0.114 | 0.545 | 3.026 | 0.001 | 3.235 | 0.001 |
RNW | −4.125 | 1.000 | 2.568 | 0.005 | 2.746 | 0.003 |
EI | −1.251 | 0.894 | 4.406 | 0.000 | 4.710 | 0.000 |
EPS | −3.528 | 1.000 | 0.171 | 0.432 | 0.183 | 0.428 |
TO | 0.835 | 0.202 | 0.669 | 0.252 | 0.715 | 0.237 |
GT | 0.313 | 0.377 | 5.003 | 0.000 | 5.348 | 0.000 |
ECI | −4.878 | 1.000 | 1.818 | 0.034 | 1.944 | 0.026 |
Model A | 1.015 | 0.155 | 5.078 | 0.000 | 6.348 | 0.000 |
Model B | −2.274 | 0.989 | 4.485 | 0.000 | 5.790 | 0.000 |
Intercept | Trend-Intercept | |||||||
---|---|---|---|---|---|---|---|---|
IPS | LLC | IPS | LLC | |||||
W Stat. | Prob. | t-Stat. | Prob. | W Stat. | Prob. | t-Stat. | Prob. | |
GG | 1.997 | 0.977 | 0.261 | 0.603 | −0.023 | 0.490 | 0.275 | 0.608 |
ΔGG | −11.578 | 0.000 | −6.741 | 0.000 | −9.023 | 0.000 | −3.743 | 0.000 |
FD | −0.064 | 0.473 | 1.008 | 0.843 | −1.398 | 0.081 | −1.090 | 0.137 |
ΔFD | −12.592 | 0.000 | −11.418 | 0.000 | −11.081 | 0.000 | −10.174 | 0.000 |
RNW | 3.476 | 0.999 | −1.147 | 0.125 | −0.792 | 0.214 | 1.764 | 0.961 |
ΔRNW | −14.160 | 0.000 | −15.149 | 0.000 | −12.314 | 0.000 | −12.385 | 0.000 |
EI | 1.362 | 0.913 | −1.018 | 0.154 | 0.172 | 0.568 | 0.246 | 0.597 |
ΔEI | −11.743 | 0.000 | −4.960 | 0.000 | −10.362 | 0.000 | −4.406 | 0.000 |
EPS | −0.788 | 0.215 | 1.146 | 0.874 | −0.642 | 0.260 | 2.010 | 0.977 |
ΔEPS | −6.591 | 0.000 | −6.655 | 0.000 | −6.486 | 0.000 | −3.009 | 0.001 |
TO | 2.037 | 0.979 | −0.642 | 0.260 | −0.616 | 0.268 | 0.901 | 0.816 |
ΔTO | −10.518 | 0.000 | −4.335 | 0.000 | −8.556 | 0.000 | −3.284 | 0.000 |
GT | −0.371 | 0.355 | −0.215 | 0.414 | 1.310 | 0.905 | 0.087 | 0.534 |
ΔGT | −17.427 | 0.000 | −13.832 | 0.000 | −10.580 | 0.000 | −15.124 | 0.000 |
ECI | −1.206 | 0.113 | 0.185 | 0.573 | −1.015 | 0.155 | −0.146 | 0.441 |
ΔECI | −7.516 | 0.000 | −3.115 | 0.000 | −7.214 | 0.000 | −2.020 | 0.021 |
Johansen Panel Cointegration | |||||
---|---|---|---|---|---|
Model A | Hyp. | Trace | 0.05 | ||
No. of CE(s) | Eigenv. | Stat. | Crt. Val. | Prob | |
None | 0.493 | 1544.408 | 159.530 | 0.000 | |
No more than 1 | 0.478 | 1232.170 | 125.615 | 0.000 | |
No more than 2 | 0.402 | 933.310 | 95.754 | 0.000 | |
No more than 3 | 0.354 | 697.170 | 69.819 | 0.000 | |
No more than 4 | 0.305 | 496.243 | 47.856 | 0.000 | |
No more than 5 | 0.261 | 328.637 | 29.797 | 0.000 | |
No more than 6 | 0.219 | 189.452 | 15.495 | 0.000 | |
No more than 7 | 0.152 | 75.888 | 3.841 | 0.000 | |
Hyp. | Max-Eigen | 0.05 | |||
No. of CE(s) | Eigenv. | Stat. | Crt. Val. | Prob. | |
None | 0.493 | 312.238 | 52.363 | 0.000 | |
No more than 1 | 0.478 | 298.860 | 46.231 | 0.000 | |
No more than 2 | 0.402 | 236.139 | 40.078 | 0.000 | |
No more than 3 | 0.354 | 200.927 | 33.877 | 0.000 | |
No more than 4 | 0.305 | 167.606 | 27.584 | 0.000 | |
No more than 5 | 0.261 | 139.185 | 21.132 | 0.000 | |
No more than 6 | 0.219 | 113.565 | 14.265 | 0.000 | |
No more than 7 | 0.152 | 75.888 | 3.841 | 0.000 | |
Model B | Hyp. | Trace | 0.05 | ||
No. of CE(s) | Eigenv. | Stat. | Crt. Val. | Prob. | |
None | 0.494 | 1745.055 | 197.371 | 0.000 | |
No more than 1 | 0.484 | 1431.569 | 159.530 | 0.000 | |
No more than 2 | 0.415 | 1127.091 | 125.615 | 0.000 | |
No more than 3 | 0.382 | 880.830 | 95.754 | 0.000 | |
No more than 4 | 0.345 | 659.440 | 69.819 | 0.000 | |
No more than 5 | 0.267 | 464.675 | 47.856 | 0.000 | |
No more than 6 | 0.245 | 321.539 | 29.797 | 0.000 | |
No more than 7 | 0.218 | 192.336 | 15.495 | 0.000 | |
No more than 8 | 0.158 | 79.307 | 3.841 | 0.000 | |
Hyp. | Max-Eigen | 0.05 | |||
No. of CE(s) | Eigenv. | Stat. | Crt. Val. | Prob. | |
None | 0.494 | 313.486 | 58.434 | 0.000 | |
No more than 1 | 0.484 | 304.478 | 52.363 | 0.000 | |
No more than 2 | 0.415 | 246.261 | 46.231 | 0.000 | |
No more than 3 | 0.382 | 221.391 | 40.078 | 0.000 | |
No more than 4 | 0.345 | 194.765 | 33.877 | 0.000 | |
No more than 5 | 0.267 | 143.136 | 27.584 | 0.000 | |
No more than 6 | 0.245 | 129.203 | 21.132 | 0.000 | |
No more than 7 | 0.218 | 113.029 | 14.265 | 0.000 | |
No more than 8 | 0.158 | 79.307 | 3.841 | 0.000 | |
Kao Residual Cointegration | |||||
Model A | t-Statistic | Prob. | Model B | t-Statistic | Prob. |
ADF | −10.641 | 0.000 | ADF | −3.861 | 0.000 |
Residual var. | 1.047556 | Residual var. | 1.047339 | ||
HAC var. | 0.712478 | HAC var. | 0.712091 |
Model A | Model B | |||||||
---|---|---|---|---|---|---|---|---|
Variable | Coef. | Std. Er. | t-Stat. | Prob. | Coef. | Std. Er. | t-Stat. | Prob. |
FD | −2.094 | 0.341 | −6.135 | 0.000 | −3.760 | 0.546 | −6.885 | 0.000 |
EI | −1.861 | 0.141 | −13.187 | 0.000 | −1.669 | 0.153 | −10.909 | 0.000 |
RNW | 0.981 | 0.059 | 16.555 | 0.000 | 0.089 | 0.005 | 16.339 | 0.000 |
EPS | 0.206 | 0.045 | 4.564 | 0.000 | 0.322 | 0.044 | 7.311 | 0.000 |
TO | −0.022 | 0.003 | −7.223 | 0.000 | −0.019 | 0.003 | −5.575 | 0.000 |
GT | 0.463 | 0.121 | 3.830 | 0.000 | 0.505 | 0.098 | 5.168 | 0.000 |
ECI | −0.333 | 0.120 | −2.776 | 0.006 | −0.238 | 0.118 | −2.021 | 0.044 |
EPS*FD | - | - | - | - | 0.444 | 0.195 | 2.280 | 0.023 |
Stat. | Prob. | Stat. | Prob. | |||||
Ramsey’s Reset | 0.882 | 0.378 | 0.627 | 0.530 | ||||
Serial Correlation LM (Breusch–Godfrey) | 1.699 | 0.115 | 1.168 | 0.132 | ||||
Heteroskedasticity (Breusch–Pagan–Godfrey) | 1.197 | 0.302 | 0.919 | 0.499 | ||||
Adj. R2 | 0.716 *** | 0.714 *** |
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Nur, T.; Topaloglu, E.E.; Yilmaz-Ozekenci, S.; Koycu, E. The Impact of Energy Intensity, Renewable Energy, and Financial Development on Green Growth in OECD Countries: Fresh Evidence Under Environmental Policy Stringency. Energies 2025, 18, 1790. https://doi.org/10.3390/en18071790
Nur T, Topaloglu EE, Yilmaz-Ozekenci S, Koycu E. The Impact of Energy Intensity, Renewable Energy, and Financial Development on Green Growth in OECD Countries: Fresh Evidence Under Environmental Policy Stringency. Energies. 2025; 18(7):1790. https://doi.org/10.3390/en18071790
Chicago/Turabian StyleNur, Tugba, Emre E. Topaloglu, Sureyya Yilmaz-Ozekenci, and Erol Koycu. 2025. "The Impact of Energy Intensity, Renewable Energy, and Financial Development on Green Growth in OECD Countries: Fresh Evidence Under Environmental Policy Stringency" Energies 18, no. 7: 1790. https://doi.org/10.3390/en18071790
APA StyleNur, T., Topaloglu, E. E., Yilmaz-Ozekenci, S., & Koycu, E. (2025). The Impact of Energy Intensity, Renewable Energy, and Financial Development on Green Growth in OECD Countries: Fresh Evidence Under Environmental Policy Stringency. Energies, 18(7), 1790. https://doi.org/10.3390/en18071790