The roles of macroeconomic indicators on renewable energy and carbon emissions: a comparison of developed and developing countries

Purpose This research aims to evaluate the effects of selected macroeconomic indicators (economic growth, export, import, inflation, unemployment, foreign direct investment and saving) on carbon emissions (CO2) and renewable energy (REN) use in developed and developing countries. Design/methodology/approach The research used World Bank data for 22 developed and 25 developing countries between 2005 and 2021. First, cross-sectional dependency tests were applied. Then, the Westerlund cointegration test was used to test the cointegration relationship. Last, based on panel data analysis, the data were analyzed using the Driscoll–Kraay estimator, generalized method of moments (GMM) and augmented mean group (AMG). Findings The analysis results of the REN model indicate that in developed countries, a one-unit increase in economic growth and foreign direct investment leads to a decrease in REN consumption. In contrast, increases in inflation, savings and unemployment increase REN consumption. In developing countries, a one-unit increase in economic growth and imports increases REN consumption, while increases in exports, inflation, savings and unemployment decrease REN consumption. The analysis results of the CO2 model indicate that in developed countries, a one-unit increase in economic growth and exports results in increased CO2. In contrast, a one-unit increase in inflation, unemployment, savings, foreign direct investment and imports results in a reduction in CO2. In developing countries, a one-unit increase in economic growth, exports and foreign direct investment is associated with a reduction in CO2. In contrast, a one-unit increase in inflation, savings and unemployment is associated with a rise in CO2. Originality/value The research is the first to examine the individual effects of macroeconomic factors on REN consumption and CO2 emissions with a holistic approach and make comparisons in developed and developing countries.