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Does Financial Openness Expand the Renewable Energy Investment in Latin American Countries?

In: Globalisation and Energy Transition in Latin America and the Caribbean

Author

Listed:
  • Matheus Koengkan

    (University of Aveiro)

  • José Alberto Fuinhas

    (University of Coimbra)

Abstract

This chapter investigates the impact of financial openness on renewable energy investment in Latin American countries from 1980 to 2014. A panel autoregressive distributed lags (PARDL) model in the form of an unrestricted error correction model (UECM) is estimated, and robustness checks and causality analysis are performed with a panel vector autoregression (PVAR) model and a panel Granger causality Wald test. The PARDL estimates indicate that financial openness has a positive long-run impact on renewable energy investment, proxied by the installed capacity of renewable energy. Such investment is also positively affected by per capita economic growth (in the short run) and per capita general government’s capital stock (in the long run). The robustness assessment confirms positive causalities between per capita economic growth, financial openness, and per capita general government capital stock. Furthermore, the results of the Granger causality analysis indicate that bidirectional Granger causal links exist between all the variables in the model.

Suggested Citation

  • Matheus Koengkan & José Alberto Fuinhas, 2022. "Does Financial Openness Expand the Renewable Energy Investment in Latin American Countries?," Springer Books, in: Globalisation and Energy Transition in Latin America and the Caribbean, chapter 0, pages 27-61, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-13885-0_3
    DOI: 10.1007/978-3-031-13885-0_3
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