Asymmetric Determinants of Renewable Energy Production in Pakistan: Do Economic Development, Environmental Technology, and Financial Development Matter?

• Published in: Journal of the knowledge economy 2024-03, Vol.15 (1), p.4097-4114
• Main Authors: Iqbal, Shahid, Wang, Ying, Ali, Sharafat, Amin, Nabila, Kausar, Shaheen
• Format: Article
• Language: English
• Subjects: Asymmetry; Carbon dioxide; Economic development; Economic Policy; Economics; Economics and Finance; Emissions; Energy; Entrepreneurship; Foreign investment; GDP; Gross Domestic Product; R & D/Technology Policy; Renewable resources
• ISSN: 1868-7865; 1868-7873
• DOI: 10.1007/s13132-023-01309-6

This study extends the energy-environment literature by investigating the asymmetric determinants of renewable energy production in a developing country like Pakistan. We have utilized the linear and nonlinear versions of the ARDL method for short- and long-run analysis. The findings of the linear model imply that long-term improvement in renewable energy production is influenced by factors such as GDP, environmental advancements, CO 2 emissions, financial development, and foreign direct investment. Aside from foreign direct investment, every other factor promotes renewable energy development in the short run. Likewise, the findings of the nonlinear framework confirm that positive shocks in GDP, environment-related technologies, and financial development promote renewable energy production. On the other hand, although the negative shock to environmental technology lowers renewable energy output, the negative shock to the GDP and financial growth is negligible. The production of renewable energy is increased in the short run by positive shocks to GDP, environmental technology, and foreign direct investment, whereas adverse shocks halt the production of renewable energy.