Q43 - Energy and the MacroeconomyReturn

Green finance aims to achieve a balance between economic performance and sustainable economic development. This study examines the effect of green finance on sustainable eco- nomic development at the national level by spotlighting countries that are at the forefront of green bond issuance. Employing balanced panel data and utilizing a mediation model with fixed effects, the results demonstrate a significant ability of green finance to mitigate carbon emissions and promote high-quality economic development. The robustness of the findings is confirmed by a series of statistical tests. Furthermore, the renewable energy consumption structure enhances the suppressive effect of green finance on carbon emissions, highlighting its crucial role as a channel for mitigating carbon emissions. Overall, increasing green bond investment and structuring renewable energy consumption are crucial for carbon emission reduction, and this paper contributes new evidence regarding the emission reduction effects of green finance. It also offers several policy implications: by prioritizing green finance, R&D, and renewable energy consumption, the policymakers can achieve high quality economic development and lower carbon emissions.

Motivated by the persistent rise in bilateral trade imbalance in Nigeria, this paper empirically examines whether Nigeria's four trading partners (China, India, the UK and the US) respond asymmetrically to changes in the oil price and exchange rate using a nonlinear autoregressive distributed lag model over the period from January 1999 to December 2019. Interestingly, we find that oil price increase and decrease influence Nigeria's trade balance with four trading partners asymmetrically. Further evidence indicates that oil price increases predominantly exert greater influence than decreases. Furthermore, Nigeria's trade balances with India and the UK in the long run and the US in the short run significantly respond asymmetrically to changes in exchange rate. In addition the result establishes significant evidence of the J-curve pattern in the response of Nigeria's trade balance with the UK to differences in exchange rate.

In this paper, we propose a model that demonstrates the influence of household ecological preferences on their acceptance of spending on renewable energy. The model discusses the production of energy from both non-renewable and renewable sources, the quality of the natural environment, pollution emissions, and utility maximization. If households choose to reduce pollutant emissions, they should reduce their levels of consumption. The main aspect that distinguishes the proposed model is the assumption of complementarity between physical capital and energy. This complementarity exists due to the fact that non-renewable natural resources are the main energy source throughout the world. The presented model is solved and analysed in detail. Our analysis of the model leads to the conclusion that maximizing the utility share of the total production spent on renewable energy generation depends on the relation of both preference parameters, not on each individual preference parameter. Since the presented model helps to explain several economic mechanisms, it may become incorporated into a larger model.

This paper examines the role of structural change in the asymmetric adjustment of retail energy prices following changes in crude oil costs. The paper also examines the pattern of adjustment in retail energy prices when exchange rate is accounted for as part of the marginal cost of importing crude oil in European countries with high oil import dependency ratio. The paper shows that the results of Greenwood-Nimmo and Shin (2013) no longer hold when the structural change in the relationship between retail energy prices and crude oil costs is taken into the consideration. The paper also cautions that studies like Kristoufek and Lunackova (2014) that failed to account for exchange rate as part of the marginal cost of importing oil for countries with high oil import dependency ratio may be misleading. In fact, the results of this paper further indicate that once the exchange rate effect is taken into consideration, the possibility of rent-seeking behaviour in the gasoline markets of Italy and Spain disappears; while the rockets and feathers effect observed in most of the ex-tax gasoline, diesel, domestic heating oil and industrial fuel oil markets vanishes.