What's at Stake? The empirical importance of government revenue and debt and renewable energy for environmental neutrality in the US economy

Abstract

Environmental taxes and pollution reduction have been the subject of several studies. By factoring the costs of pollution and other environmental costs into pricing, environmental taxes assist in correcting erroneous price mechanisms in the marketplace. It did, however, overlook the government's potential to facilitate the use of efficient energy sources, which is critical for environmental neutrality. The competence of a government is determined by its tax revenues, which allow the state to participate more in renewable energy technologies, offer an excellent opportunity to reduce greenhouse gas emissions and global warming by replacing traditional energy sources. To that aim, the impact of government revenues and debts, as well as renewable energy on environmental neutrality in the United States, is the only motive to conduct this research. A significant outcome of the renewable energy-environment nexus is revealed by tax revenue and debt. Since there seems to be no causation in the first moment, but higher-order interconnectedness emerges, as the quarterly data from 1990Q1 to 2020Q4 has been obtained to test for causality-in-mean and causality-in-variance employing novel non-parametric causality-in-quantiles algorithms. The findings reveal that renewable energy consumption and financial depth have significant predictive power for ecological footprint, uncovering asymmetric prediction across ecological transmission. Also, tax revenues and government debts found a significant connection and predictive potential in estimating the environmental footprint level. Thus, out of multiple suggestions, the study suggests that the government push tax reform policies to obtain investment in renewable energy sources. This shift toward renewable technology innovation allows the US to go green and retain environmental sustainability, which is also an utmost urgency of the UN's Sustainable development Goals (SDG-7).