Indirect impact of public expenditures and inflation on energy poverty: empirical evidence from 32 developing countries

Abstract

ABSTRACT Energy poverty (EP) is an important barrier to environmental sustainability, and many studies have addressed its causes and linkages with various macroeconomic variables. However, there has been insufficient analysis of the indirect effects of public expenditures and inflation on EP, particularly through income. This study analyses the effects of public expenditures and inflation on EP for 32 developing countries using Panel GMM and 3SLS methods. The findings indicate that public expenditures are an important public policy instrument in combating EP. Conversely, the study reveals that inflation negatively affects energy poverty. Moreover, the study concludes that there is a U-shaped relationship between inflation and income inequality and that a decline in inflation over time will positively affect EP through income inequality.