What was done under the Argentine Sun: an econometric study of environmental quality along with economic growth and financial development

Abstract

This study investigates the relationships among carbon emissions, energy consumption, economic growth, financial development, trade openness, and capital in Argentina from 1971 to 2018. In addition to two conventional tests, Zivot-Andrews and Perron-Vogelsang ones have also been used to detect the order of stationarity for the observed variables. There is strong evidence that indicates the presence of a long-term relationship among the variables, when ARDL testing approach with breaks is used. Bayer-Hanck cointegration test confirms our empirical results. The results show a negative and statistically significant impact of financial development on energy consumption, while trade openness and economic growth have a positive effect on energy consumption in the long run. Estimation findings reveal that 1% increase of financial development reduces energy consumption by 0.008%. On the other hand, 1% increase in economic growth raises energy consumption at 0.068% level, respectively. Nevertheless, promoting the role of capital and trade openness can never be left out from the process of development and efficient use of energy. In order to attain sustainable development goals, it is necessary to further develop technologies of efficient energy use in financial development and economic growth in related decisions by policy makers.