Mineral resources policy with economic risk: Envisaging the role of mineral resources with inclusive financial development for the US economy

Abstract

While previous research has thoroughly examined the influence of natural resources and economic growth on a global scale, there is a noticeable gap in the literature regarding analyzing the impact of mineral rents. This gap is significant and warrants attention due to mineral rents crucial role in renewable energy projects, its contribution to the promotion of mining activities, and its potential to influence regional stability. Hence, unlike previous studies, this research investigates the nexus of mineral rents and economic growth in the USA from 1984 to 2022. The research also incorporates the role of economic risk, financial development index, renewable energy consumption, and technological innovation. This research used time series methods encompass relevant parametric approaches, i.e., Fully modified OLS, Dynamic OLS and canonical cointegration regression for the unit root specifications in the data. For robustness, simple OLS with break years and robust OLS are deployed in the research to evaluate the robustness of estimated findings. The empirical outcomes assert that long-run equilibrium exists between economic progression and all its co-variates across models. The outcomes of linear and non-linear procedures based on the long-run association and quantile-based approach disclose that mineral rents established a resource curse hypothesis for economic growth. The increase in mineral rents by 1% causes a decrease in economic growth by -0.026% and -0.014% across all methods. Moreover, financial development index, renewable energy consumption, and technological innovation are found to induce economic progression in the long run. However, in contrast, economic risk is determined to decrease economic progression, but its outcomes are found to be insignificant in the long run across quantiles. The outcomes of robustness procedures provide a better understanding of supporting the main estimations through logical findings. In terms of policy implications, the research recommends channeling mineral resources to influence the real segments of the economy, i.e., economic progression. Moreover, the research encourages the promotion of multilevel financial development, renewable energy, and technological innovation to benefit from its influence on expanding sustainable economic progression.