How Economic Growth affected from Technological Innovation, CO2 Emissions, and Renewable Energy Consumption? Empirical Analysis in G7 Countries

Abstract Today's economically developed nations are also among the most advanced in terms of energy production and consumption. In particular, the widespread implementation of renewable energy sources and the plethora of technological advancements supporting long-term prosperity stand out. The research aims to examine how carbon dioxide (CO2) emissions, technological advancements, and the use of renewable energy sources affect economic expansion. Research and development (R&D) expenses are regarded as a proxy for technological progress. Using annual data for the G7 countries from 1996 through 2020, the analysis quantified the interplay between the factors. We examine the association between our variables using panel unit root tests, Pedroni cointegration tests, ARDL coefficient estimations, and Granger (Dumitrescu Hurlin) causality tests. The Pedroni cointegration test indicated that the variables are cointegrated. According to the ARDL method of computation, increasing levels of CO2 emissions are beneficial to long-term economic growth. However, improvements in renewable energy and technology dampen economic expansion. As a conclusion, the Dumitrescu-Hurlin causality test shows that there is a unidirectional chain of events from CO2 emissions to technological improvements, from economic growth to use of renewable energy, and from consumption of renewable energy to technological advances. Expansion of the economy and increased emissions of carbon dioxide have a reciprocal relationship. Jel classification: O13, O32, O47, Q53