Analysis of the Dynamic Relationships among Renewable Energy Consumption, Economic Growth, Financial Development, and Carbon Dioxide Emission in Five Sub-Saharan African Countries

Abstract

This research investigates the relationships among renewable energy consumption, economic growth, and financial development in five sub-Saharan African nations utilizing panel data from 2000 to 2020. Econometric methods are used to ascertain the existence or absence of cross-sectional dependence and the short-run and long-run connections between the following factors: Pesaran cross-sectional dependence (CD) and cross-sectionally augmented IPS (CIPS) unit root tests, pooled mean group (PMG), and dynamic ordinary least squares (DOLS) estimations. The presence of cross-sectional dependence is found and represented with the CIPS unit root test. No significant short-run relationship is found between the variables of the study, yet a significant long-run relationship is present among them. A positive relationship exists between CO2 emissions and financial development, while financial development and renewable energy consumption are found to have negative relationships with CO2 emissions. The study also supports the scale effect of the environmental Kuznets curve hypothesis. Additionally, no causality is found among the variables, and impulse response and variance decomposition estimation are carried out to recommend future effects. Policy implications of findings are discussed, with accompanying suggestions.