How Polluting Emissions React to Different Shocks of the Economic Cycle (Based on Renewable and non-Renewable Energy) in Developing Countries: A Panel Vector Autoregressive Analysis (PVAR)?

Abstract

Abstract The review of previous literature shows us that the study of the relational triad “economic growth, energy consumption and CO2 emissions” can be qualified as one of the most analyzed subjects. However, it seems to us that there remains an important subject to explore. This involves carefully questioning, using a PVAR model, how polluting emissions (recorded in 35 developing countries and covering a time horizon going from 1990 to 2020) behave and react to different shocks of the economic cycle ? The answer to this question will allow us to achieve the objective of this research which is to confirm or refute whether the countries considered in our sample have the transition possibility towards ecological growth models or not. Thus, to answer this central question in the context of this article, it was necessary to resort to a “panel vector autoregressive model (PVAR), developed by Love and Zicchino (2006)” which will allow us to analyze the functions impulse response (IRF) which allow us to examine how economic cycle shocks influence and affect polluting emissions and how said shocks could challenge new sources of energy, both “renewable and non-renewable”. To refine this analysis, we then carried out a decomposition of the variance of all variables. Overall, the main results emerged focused on three central ideas. Firstly, that any enrichment suffered by these countries can only be achieved through increasingly intense use of CO2-emitting energies. Second, that the phenomenon of substitution of "polluting energies" by “renewable energies” is possible, which makes it possible to establish the possibility of a policy of purification and sanitation of the environment in developing countries by investing more in the sector “renewable energies”. Third, despite these theoretical possibilities, the development of the “renewable energy” sector in developed countries is still weak and its contribution to an ecological environment promoting “economic growth” remains weak. Several policies must be considered and discussed to be able to move towards ecological growth but it should be noted that the effectiveness of these can only take place if the countries considered will all have a common will which, without it, each individual effort miss its goal. JEL Classification : Q1; Q2; Q3