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Do the shocks in technological and financial innovation influence the environmental quality? Evidence from BRICS economies

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  • Chishti, Muhammad Zubair
  • Sinha, Avik

Abstract

The current paper formulates a novel framework to scrutinize the effects of shocks in technological and financial innovation on carbon dioxide emissions (CO2e) in BRICS economies. The Westerlund cointegration test is applied to confirm the long-run association among the constructs. The estimates of second-generation techniques, viz, Augmented Mean Group (AMG) and Common Correlated Effect Mean Group (CCEMG), determine the following results. First, the positive shocks from financial innovation significantly disrupt the CO2e, while financial innovation's adverse shocks cause to stimulate pollution. Second, positive shocks in technological innovation also plays a pivotal role in mitigating carbon emissions while the negative shocks exhibit no impact. Third, the process of urbanization exhibits a negative linkage with environmental degradation. Fourth, fossil fuel consumption demonstrates a positive association with CO2e. Lastly, the negative correlation between foreign direct investment-CO2e nexus and GDP per capita squared-CO2e nexus assert the existence of EKC hypothesis, respectively. Also, fully-modified OLS is also deployed for country-level analysis. Besides, the causality test validates the findings by confirming the causal relationship among the modeled variables. Based on the study outcomes, this study has recommended an SDG-oriented policy framework.

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  • Chishti, Muhammad Zubair & Sinha, Avik, 2021. "Do the shocks in technological and financial innovation influence the environmental quality? Evidence from BRICS economies," MPRA Paper 110943, University Library of Munich, Germany, revised Nov 2021.
    • Handle: RePEc:pra:mprapa:110943
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    More about this item

    Keywords

    Financial innovation; Technological innovation; CO2e; FDI; urbanization; BRICS;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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