Synergies between global low-carbon development processes and financial fluctuations from 1991–2019: a functional data analysis

Abstract

Financial fluctuations affect all aspects of economic production and daily life. Using the slacks-based measure (SBM) model and the functional data analysis (FDA) technique, this study examined the pattern of global low-carbon development and the synergies between these development processes and financial fluctuations from 1991–2019. The main results show that (1) the world is making steady progress in low-carbon development. However, there were clear imbalances at the regional level. Among the countries analysed, Italy, Luxembourg, and the United States are leading in low-carbon development, while Ukraine, Bulgaria, and Slovakia are lagging. (2) The direction and magnitude of financial development affecting global low-carbon development vary over time. In recent years, its internal instabilities have increased. (3) There are distinct spatial heterogeneities in the direction and magnitude of this impact. Compared with other regions, Europe and the Asia-Pacific region’s low-carbon development processes are more sensitive to their own financial situation.