Renewable Energy through the Lenses of Financial Development and Technological Innovation: The Case of CEE Countries

Abstract

Central and Eastern Europe countries are considered as a fragile group of economies compared to European Union countries. Furthermore, against the backdrop of rapid industrial growth, this study examines the spillover effects of financial development (FD) and technological innovation (TI) on levels of consumptions with regard to CEE countries renewable energy. Hence, by considering proxies for technological innovation such as trademarks, patents, and grants received for innovation, we assess the stimulus of technological advancement on the consumption of renewable energy. While broad money stock ratio is used for financial deepening. The empirical outcomes of this research will explicate whether advancement in innovation capacity and financial development stimulates the demand for renewable energy. This research will target CEE countries, and the period of examination will be for 2000–2019. Therefore, our model will employ the following explanatory variables; technological innovation, capital formation, and income inequality to test their influence on taking advantages of applying different technologies in renewable energy. Lastly, our study will provide important policy prescriptions for the regulators to ensure an enabling appropriate environment to support renewable energy for pollution abatement.