IDEAS home Printed from https://ideas.repec.org/a/kap/ecopln/v57y2024i4d10.1007_s10644-024-09723-9.html
   My bibliography  Save this article

Do energy, inflation, and financial development stimulate economic welfare in India? Empirical insights from novel dynamic ARDL and KRLS simulations

Author

Listed:
  • Mohammad Subhan

    (Aligarh Muslim University)

  • Aqsa Anjum

    (Aligarh Muslim University)

  • M. N. Zamir

    (Aligarh Muslim University)

  • Dervis Kirikkaleli

    (European University of Lefke
    Lebanese American University)

Abstract

The present study focuses on investigating the effect of renewable and non-renewable energy consumption (REC and NREC), financial development (FD), and inflation (INF) on economic welfare (EW) in India during 1990–2019. In this research, we employ a novel dynamic autoregressive distributed lag model and a kernel-based machine learning algorithm and regularise least squares to detect causal linkages among the variables. To measure the economic welfare index, this research uses the PCA analysis with GDP, human capital, environmental damage, number of employed persons, life expectancy at birth, and real consumption in households and by the government. According to the findings, the NREC and FD have been favourably contributing to EW. Conversely, the EW is adversely affected by REC. However, INF also has an adverse impact on EW, although it may be insignificant in the long run and significant in the short run.

Suggested Citation

  • Mohammad Subhan & Aqsa Anjum & M. N. Zamir & Dervis Kirikkaleli, 2024. "Do energy, inflation, and financial development stimulate economic welfare in India? Empirical insights from novel dynamic ARDL and KRLS simulations," Economic Change and Restructuring, Springer, vol. 57(4), pages 1-27, August.
    • Handle: RePEc:kap:ecopln:v:57:y:2024:i:4:d:10.1007_s10644-024-09723-9
    DOI: 10.1007/s10644-024-09723-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10644-024-09723-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10644-024-09723-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jaganath Behera & Alok Kumar Mishra, 2020. "Renewable and non-renewable energy consumption and economic growth in G7 countries: evidence from panel autoregressive distributed lag (P-ARDL) model," International Economics and Economic Policy, Springer, vol. 17(1), pages 241-258, February.
    2. Solomon Prince Nathaniel, 2021. "Ecological footprint and human well-being nexus: accounting for broad-based financial development, globalization, and natural resources in the Next-11 countries," Future Business Journal, Springer, vol. 7(1), pages 1-18, December.
    3. Ngwen Ngangue & Kouty Manfred, 2015. "The Impact of Life Expectancy on Economic Growth in Developing Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(4), pages 653-660.
    4. Ngwen Ngangue & Kouty Manfred, 2015. "The Impact of Life Expectancy on Economic Growth in Developing Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(4), pages 653-660, April.
    5. Kalimeris, Panos & Bithas, Kostas & Richardson, Clive & Nijkamp, Peter, 2020. "Hidden linkages between resources and economy: A “Beyond-GDP” approach using alternative welfare indicators," Ecological Economics, Elsevier, vol. 169(C).
    6. Brent Bleys, 2012. "Beyond GDP: Classifying Alternative Measures for Progress," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 109(3), pages 355-376, December.
    7. Peter A. Diamond, 1993. "Search, Sticky Prices, and Inflation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(1), pages 53-68.
    8. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    9. Mouawiya Al-Awad & Nasri Harb, 2005. "Financial development and economic growth in the Middle East," Applied Financial Economics, Taylor & Francis Journals, vol. 15(15), pages 1041-1051.
    10. Kerry Krutilla, 2005. "Using the Kaldor-Hicks tableau format for cost-benefit analysis and policy evaluation," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(4), pages 864-875.
    11. Mohd Hammad Naeem & Mohammad Subhan & Md Shabbir Alam & Mamdouh Abdulaziz Saleh Al-Faryan & Mohammad Yameen, 2023. "Examining the role of financial innovation on economic growth: Fresh empirical evidence from developing and developed countries," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2170000-217, December.
    12. Jeroen van den Bergh & Giorgos Kallis, 2012. "Growth, A-Growth or Degrowth to Stay within Planetary Boundaries?," Journal of Economic Issues, Taylor & Francis Journals, vol. 46(4), pages 909-920.
    13. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    14. Inglesi-Lotz, Roula, 2016. "The impact of renewable energy consumption to economic growth: A panel data application," Energy Economics, Elsevier, vol. 53(C), pages 58-63.
    15. Valerie R. Bencivenga & Bruce D. Smith, 1991. "Financial Intermediation and Endogenous Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 195-209.
    16. Abdel‐Hameed M. Bashir, 2002. "The welfare effects of inflation and financial innovation in a model of economic growth," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 29(1), pages 21-32, February.
    17. Soren Jordan & Andrew Q. Philips, 2018. "Cointegration testing and dynamic simulations of autoregressive distributed lag modelsJournal: Stata Journal," Stata Journal, StataCorp LP, vol. 18(4), pages 902-923, December.
    18. Mohammed Yelwa & Okoroafor O.K.David & Awe, Emmanuel Omoniyi, 2015. "Analysis of the Relationship between Inflation, Unemployment and Economic Growth in Nigeria: 1987-2012," Applied Economics and Finance, Redfame publishing, vol. 2(3), pages 102-109, August.
    19. Chang, Ting-Huan & Huang, Chien-Ming & Lee, Ming-Chih, 2009. "Threshold effect of the economic growth rate on the renewable energy development from a change in energy price: Evidence from OECD countries," Energy Policy, Elsevier, vol. 37(12), pages 5796-5802, December.
    20. Irene van Staveren, 2012. "An Evolutionary Efficiency Alternative to the Notion of Pareto Efficiency," Economic Thought, World Economics Association, vol. 1(1), pages 1-6, July.
    21. Sari, Ramazan & Ewing, Bradley T. & Soytas, Ugur, 2008. "The relationship between disaggregate energy consumption and industrial production in the United States: An ARDL approach," Energy Economics, Elsevier, vol. 30(5), pages 2302-2313, September.
    22. repec:wea:econth:v:1:y:2012:i:1:p:7 is not listed on IDEAS
    23. Roland Benabou, 1988. "Search, Price Setting and Inflation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(3), pages 353-376.
    24. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
    25. María Ibarrarán & Matthias Ruth & Sanjana Ahmad & Marisa London, 2009. "Climate change and natural disasters: macroeconomic performance and distributional impacts," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 11(3), pages 549-569, June.
    26. Ferwerda, Jeremy & Hainmueller, Jens & Hazlett, Chad J., 2017. "Kernel-Based Regularized Least Squares in R (KRLS) and Stata (krls)," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 79(i03).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thomas Gries & Manfred Kraft & Daniel Meierrieks, 2011. "Financial deepening, trade openness and economic growth in Latin America and the Caribbean," Applied Economics, Taylor & Francis Journals, vol. 43(30), pages 4729-4739.
    2. Jagadish Prasad Bist & Nar Bahadur Bista, 2018. "Finance–Growth Nexus in Nepal: An Application of the ARDL Approach in the Presence of Structural Breaks," Vikalpa: The Journal for Decision Makers, , vol. 43(4), pages 236-249, December.
    3. Jean-Pierre Allegret & Sana Azzabi, 2014. "Intégration financière internationale et croissance économique dans les pays émergents et en développement : le canal du développement financier," Revue d’économie du développement, De Boeck Université, vol. 22(3), pages 27-68.
    4. Ang, James B., 2008. "What are the mechanisms linking financial development and economic growth in Malaysia," Economic Modelling, Elsevier, vol. 25(1), pages 38-53, January.
    5. Banerjee, Anindya & Mizen, Paul & Russell, Bill, 2007. "Inflation, relative price variability and the markup: Evidence from the United States and the United Kingdom," Economic Modelling, Elsevier, vol. 24(1), pages 82-100, January.
    6. Rousseau, Peter L. & Sylla, Richard, 2005. "Emerging financial markets and early US growth," Explorations in Economic History, Elsevier, vol. 42(1), pages 1-26, January.
    7. Chu, Kam Hon, 2010. "Bank mergers, branch networks and economic growth: Theory and evidence from Canada, 1889-1926," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 265-283, March.
    8. Ogbeide, Frank Iyekoetin Phd & Adeboje, Oluwafemi Mathew, . "Financial Liberalization and Business Entry Nexus in SSA Model," Journal of Economic and Sustainable Growth 1, Office Of The Chief Economist, Development Bank of Nigeria.
    9. Khalid, Usman & Shafiullah, Muhammad, 2021. "Financial development and governance: A panel data analysis incorporating cross-sectional dependence," Economic Systems, Elsevier, vol. 45(2).
    10. Gries, Thomas & Kraft, Manfred & Meierrieks, Daniel, 2009. "Linkages Between Financial Deepening, Trade Openness, and Economic Development: Causality Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 37(12), pages 1849-1860, December.
    11. Maswana, Jean-Claude, 2006. "An empirical investigation around the finance-growth puzzle in China with a particular focus on causality and efficiency considerations," MPRA Paper 3946, University Library of Munich, Germany, revised Apr 2006.
    12. Menyah, Kojo & Nazlioglu, Saban & Wolde-Rufael, Yemane, 2014. "Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach," Economic Modelling, Elsevier, vol. 37(C), pages 386-394.
    13. repec:bgu:wpaper:206 is not listed on IDEAS
    14. James B. Ang, 2008. "Are Financial Sector Policies Effective In Deepening The Malaysian Financial System?," Contemporary Economic Policy, Western Economic Association International, vol. 26(4), pages 623-635, October.
    15. Almeida, Heitor & Wolfenzon, Daniel, 2006. "Should business groups be dismantled? The equilibrium costs of efficient internal capital markets," Journal of Financial Economics, Elsevier, vol. 79(1), pages 99-144, January.
    16. Stojkoski, Viktor & Popova, Kristina, 2016. "Financial Development and Growth: Panel Cointegration Evidence from South-Eastern and Central Europe," MPRA Paper 69029, University Library of Munich, Germany.
    17. Baotai Wang & D. Ajit, 2013. "Stock Market and Economic Growth in China," EcoMod2013 5649, EcoMod.
    18. Siong Hook Law, 2008. "Does a Country's Openness to Trade and Capital Accounts Lead to Financial Development? Evidence from Malaysia," Asian Economic Journal, East Asian Economic Association, vol. 22(2), pages 161-177, June.
    19. Kamat, Manoj & Kamat, Manasvi, 2007. "The New Information Age & the Stock Market Growth Puzzle," MPRA Paper 5158, University Library of Munich, Germany.
    20. Suleiman Abu-Bader & Aamer S. Abu-Qarn, 2006. "Financial Development and Economic Growth Nexus:Time Series Evidence from Middle Eastern and North African Countries," Working Papers 0609, Ben-Gurion University of the Negev, Department of Economics.
    21. Banerjee, Anindya & Russell, Bill, 2005. "Inflation and measures of the markup," Journal of Macroeconomics, Elsevier, vol. 27(2), pages 289-306, June.

    More about this item

    Keywords

    GDP; Energy consumption; Economic welfare; Financial development; Inflation;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • D6 - Microeconomics - - Welfare Economics
    • G00 - Financial Economics - - General - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:ecopln:v:57:y:2024:i:4:d:10.1007_s10644-024-09723-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.