Effects of tourism, financial development, and renewable energy on environmental performance in EU-28: does institutional quality matter?

Institutional quality largely influences the ways in which economic agents align their production and operational behaviors towards expanding the share of renewable energy in the total energy mix and enhancing environmental performance. This study therefore explores the panel data for the EU-28 countries to assess the dynamic effects of institutional quality, tourism development, financial development, and renewable energy on environmental performance over the period 2002 to 2014. Using a two-step dynamic system generalized method of moments (GMM), the empirical results broadly suggest that institutional quality can be explored to dampen the potential negative effects of tourism and economic growth on environmental performance. In addition, financial development and renewable energy are positively related to environmental performance. This suggests that financial stability and energy consumption transition to renewable energy are necessary requirements to improve environmental performance. The policy implication for this study is that strengthening of institutional quality, financial stability, and adjusting to alternative and clean energy systems are the surest ways to achieve a cleaner and sustainable environment in the EU region.

The influence of renewable energy use, human capital, and trade on environmental quality in South Africa: multiple structural breaks cointegration approach.

Recent economic and environmental literature suggests that the current state of energy use in South Africa amidst rapid growing population is unsustainable. Researchers in this area mostly focus on the effect of fossil energy use on carbon (CO2) emission, which represents only an aspect of environmental quality. In contrast, the current study evaluates the influence of renewable energy use, human capital, and trade on ecological footprint--a more comprehensive measure of environmental quality. To this end, the study employs multiple structural breaks cointegration tests (Maki cointegration tests), dynamic unrestricted error correction model through Autoregressive Distributed Lag (ARDL) model, and VECM Granger causality tests. The results of the Maki cointegration tests reveal the existence of a cointegration between the variables in all the models with evidence of multiple structural breaks. Further, the ARDL results divulge that an increase in renewable energy use, human capital, and trade improves environmental quality through a decrease in ecological footprint, while an increase in income stimulates ecological footprint. Moreover, causal relationship is found, running from all the variables to renewable energy and trade flow in the long run, while in the short run, economic growth causes ecological footprint. Trade is found to Granger-cause human capital, while human capital causes renewable energy. Additionally, human capital, renewable energy, and economic growth are predictors of trade. The study therefore recommends South African policymakers to consider the importance of renewable energy, human capital development, and trade as a policy option to reduce ecological footprint and improve environmental quality.

Towards mitigating ecological degradation in G-7 countries: accounting for economic effect dynamics, renewable energy consumption, and innovation.

The 21st century economic growth is characterized by extensive production and consumption, which increases anthropogenic emissions. However, reducing emission levels require ecological sustainability through innovation and modern technological consideration. This paper investigated not only renewable energy-driven environmental quality but also captured innovation research investment in renewables within the framework of the environmental Kuznets curve (EKC) model for G-7 countries. The findings confirmed the presence of EKC hypothesis for G-7 countries. In addition, renewable energy and innovation were identified to exert negative effects on ecological footprint. To capture the entire conditional distribution of the ecological footprint, we applied the Method of Moments Quantile Regression with fixed-effects. The results affirmed the negative effects of renewable energy innovation. Besides, their effects were heterogeneous across the quantiles with evidence of diminishing effects from lower to higher quantiles, suggesting that countries with lower levels of ecological footprint are possibly more prone to the environmental deterioration effect of income growth. The results of the causality test support economic growth-induced ecological degradation, growth-induced renewables, and innovation-induced ecological conservation. The results further showed a feedback effect between renewables and ecological footprint, innovation, and income growth as well as innovation and renewables. These findings portend important implications for the realization of carbon-free economies in G-7 countries by 2100.

Testing the nexus between stock market returns and inflation in Nigeria: Does the effect of COVID-19 pandemic matter?

Given the palpable fear generated by the threat of COVID-19 pandemic and the bearish sentiments of stock investors, this study represents one of the first efforts towards testing the effect of COVID-19 on the stock market returns-inflation relationship. Specifically, the study investigates the stock market returns-inflation nexus by controlling for the effect of COVID-19 pandemic in Nigeria from February 27, 2020 to April 30, 2020. Using the estimation procedures based on the generalized autoregressive conditional heteroskedasticity type models (GARCH (1,1), the GJR-GARCH), and the accounting innovation tests, our results show that COVID-19 increases volatility and distorts the positive relationship between inflation and stock market returns, which tends to negate the Fisher's hypothesis. In addition, the results reveal that the negative effects of COVID-19 on the market returns and its disruption to the stock market returns-inflation relationship may not die away rapidly considering that the duration of the pandemic is unknown. Further, these findings are validated by the innovation accounting tests. Therefore, the study presents to policymakers the consequences of COVID-19 and the urgent need to strengthen the market through collaborative efforts.