The impacts of R&D investment and stock markets on clean‐energy consumption and CO2 emissions in OECD economies

The goal of this paper is to examine to what extent R&D investment and stock market development promote clean‐energy consumption and environmental protection across a panel of 30 OECD economies. Based on the theoretical approach, study employs robust panel econometric models, which account for cross‐sectional dependence in the analysis and uses annual data, spanning the period 1996–2013. The empirical results illustrate that R&D and stock market have a significant long‐run equilibrium relationship with clean energy and CO2 emissions. The long‐run elasticities display that R&D and stock market growth have a significant positive impact on clean‐energy consumption, while they have a negative effect on the growth of CO2 emissions. Given these findings, the paper suggests that the policy makers in the OECD economies should realize that it is worth investing in R&D activities as it is promoting the use of clean energy and ensuring low carbon economies. Therefore, the policymakers have to initiate effective policies to promote R&D activities and also encourage the firms that are listed in the stock market to adopt environmental friendly policies.