Optimizing the quality of casual relationships among primary energy consumption, financial growth, and trade openness: A panel data analysis of G-20 Nations

Abstract

The current research examines the interlink within G-20 economies. Advanced econometrics methods were employed in the panel data collected from 1990 to 2019. Within an employed method, co-integration, panel unit tests, and vector error models were considered, unveiling long-term interactions and the casual interlink between proposed variables. This method is essential to highlight the complicated relationship between energy usage and economic factors. It also supports the global efforts to minimize environmental degradation and fossil fuel usage to achieve the Paris Agreement goals. The current study's findings show a significant and robust long-term equilibrium between primary energy consumption, financial growth, price of energy, and trade openness. The findings further suggest that fluctuations in primary energy consumption directly impact financial growth, with trade openness being essential to this relationship. Renewable energy sources also play a vital role in mitigating carbon emissions that precisely explain sustainable financial growth without comprising the protection of environmental integrity. For the member countries of the G-20, the findings emphasize improving energy efficiency, funding for renewable energy, and maintaining stable energy prices to promote sustainable financial growth. This paper contributes to the existing literature examining the co-integration between renewable energy consumption, financial growth, and trade openness for the long run, stresses the necessity of comprehensive energy policies, and employs superior econometric estimation techniques.