Effects of financial openness on renewable energy investments expansion in Latin American countries

Abstract

This investigation approaches the effects of financial openness on renewable energy investments. With the purpose of the realisation this study, the installed capacity of renewable energy was used as proxy o renewable energy investments, and ten Latin American countries from 1980 to 2014 were utilised. The empirical results indicated that the per capita economic growth in the short-run has a positive impact on the installed capacity of renewable energy, while the variable financial openness and general government capital stock per capita in the long-run exerts a positive effect. The PVAR model pointed out to a positive impact of per capita economic growth, financial openness, and general government capital stock per capita in the short-run. The Panel Granger causality Wald test revealed the existence of bi-directional causality between the variables of the model.