The nexus between renewable energy consumption and human development in BRICS countries: The moderating role of public debt

Abstract

Although the impact of renewable energy consumption on human development has been investigated in previous studies, the results are inconsistent. In addition, public debt can directly or indirectly affect human development and renewable energy consumption. However, studies examining the moderating role of public debt in the relationship between renewable energy consumption and human development are lacking. Our research seeks to fill this gap by examining whether public debt is a factor that moderates the nexus between the renewable energy consumption and human development of BRICS countries in the period 1990–2016. By employing a set of methods that can help solve the issue of cross-sectional dependence, such as the Westerlund panel cointegration test, Driscoll-Kraay robust standard errors estimates, and Dumitrescu-Hurlin causality test, the empirical results indicate that human development is stimulated by the use of renewable energy. In contrast, public debt is harmful to human development. Similarly, the interaction term between renewable energy usage and public debt is confirmed to reduce human development. Moreover, bidirectional causality exists between human development and renewable energy consumption. Our findings suggest that BRICS countries should encourage the use of renewable energy and control the ratio of public debt to GDP at an appropriate rate.