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Linking Public Finances’ Performance to Renewable-Energy Consumption in Emerging Economies of the European Union

Author

Listed:
  • Nicoleta Mihaela Florea

    (Department of Finance, Banking and Economic Analysis, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

  • Roxana Maria Bădîrcea

    (Department of Finance, Banking and Economic Analysis, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

  • Georgeta-Madalina Meghisan-Toma

    (UNESCO Department for Business Administration, Faculty of Business Administration in Foreign Languages, Bucharest University of Economic Studies, 010375 Bucharest, Romania
    National Institute of Economic Research “Costin C. Kiritescu”, Romanian Academy, 050711 Bucharest, Romania)

  • Silvia Puiu

    (Department of Management, Marketing and Business Administration, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

  • Alina Georgiana Manta

    (Department of Finance, Banking and Economic Analysis, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

  • Dorel Berceanu

    (Department of Finance, Banking and Economic Analysis, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

Abstract

Implementing public policies linked to sustainable development is a global challenge for most countries that focused their efforts on identifying and improving the factors that led to environment degradation. The current paper analyzes the influence of primary indicators of public finances (public debt and budget deficit) on renewable-energy consumption (REN), for the emerging economies within the European Union. The main objective of this research is to understand the implications of fiscal measures on the sustainable development of a country and thus provide directions for stimulating renewable-energy consumption. The research starts with cross-sectional dependence analysis by using the Breusch–Pagan Lagrange multiplier (LM) test that is followed by cointegration relationships among variables by applying two appropriate panel-cointegration tests (Pedroni and Johansen). The research methodology is based on the fully modified ordinary-least-squares (FMOLS) method in order to test the long-run relationships, and on the pairwise Granger causality test in order to identify the direction of causality among variables. Results show unilateral influences from public debt and budget deficit on the analyzed variables, especially on renewable-energy consumption, and a bidirectional causality relationship between budget deficit and trade openness.

Suggested Citation

  • Nicoleta Mihaela Florea & Roxana Maria Bădîrcea & Georgeta-Madalina Meghisan-Toma & Silvia Puiu & Alina Georgiana Manta & Dorel Berceanu, 2021. "Linking Public Finances’ Performance to Renewable-Energy Consumption in Emerging Economies of the European Union," Sustainability, MDPI, vol. 13(11), pages 1-14, June.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:11:p:6344-:d:568202
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