ABSTRACT

۱٫ Introduction

۳٫ Research methodology

۴٫ Sample data, sources, and characteristics

۵٫ Empirical results

۶٫ Conclusions

Declarations

References

Abstract

This paper examines whether the 1997 Asian financial crisis affected the renewable energy/carbon dioxide (CO2) emissions relationship differently when compared to the 2008 global financial crises. Using the Dynamic Panel Data Model, we examine separately the impact of the 1997 crisis and the 2008 crises on the stated relationship for annual data between the 1987–۲۰۱۸ period for a group of high, upper-middle, and lower middle-income countries. Our findings suggest that the results were crisis and country specific. For the overall sample, the relationship between the two variables was positive (and significant post-1997 and pre-2008 crises) but negative post-2008 crisis. In contrast, the positive relationship remained unchanged for the lower middle-income subsample through the two crises. We also find evidence that the 1997 Asian crisis altered the relationship differently than the 2008 financial crisis especially for the upper and middle-income groups. Clearly, reduction of CO2 emissions may not be guaranteed even if host countries adopt renewable energy sources since country income levels and the nature of the crisis may matter. Future research may consider how the degree of pollution controls and differential costs of renewable energy adoption in countries may alter this relationship.

۱٫ Introduction

Research examining the renewable energy consumption/carbon dioxide (CO2) emission links for developing countries are extensive and generally recommend policies to ratchet up the local renewable energy infrastructure to encourage renewable energy consumption (Pao and Tsai, 2011; Shahbaz et al., 2013; Zhu et al., 2016), particularly for lower income countries to allow them to attract foreign direct investment (FDI) aimed at inflows of technology transfer (Omri and Kahouli, 2014; Doytch and Narayan, 2016). Extant literature also documents links between global financial crises and the transmission of technological innovation to recipient countries. For instance, Colombo et al., 2016, Zouaghi and Sánchez, 2016, and Zouaghi et al., 2018 show the firms devise survival and growth strategies designed to overcome global financial crises by developing innovation products. Although there is extensive work on the factors that affect the renewable energy adoption/CO2 emissions relationship, there is scant work (with few recent exceptions) on how a crisis will alter this relationship. The exception includes recent work by Dong et al., 2020a who show that countries switching to renewable energy sources reduced CO2 emissions (but not statistically significantly) post-2008 crisis 1 versus pre-2008 crisis levels for a sample of 120 countries.

In this paper, we add to the emerging literature by examining whether the renewable energy/pollution links were also similarly altered during the 1997 crisis. We conjecture that the impact of the 2008 crisis affected global economies differently than the 1997 crisis. Hence, we conjecture that the differential effects on country macroeconomic variables can imply differences in the relationship between renewable energy adoption and CO2 emissions pre and post each crisis. If the pre/post link changes were different for the 1997 crisis versus the 2008 crisis, then policy prescriptions useful for one crisis may not work for other crises. We don’t believe that this issue has been investigated in the extant literature. Specifically, we conjecture that the renewable energy consumption – CO2 emission relationship was altered differently by the 1997 crisis than by the 2008 crisis and may also be a function of the level of economic development of host countries.