Figure 1.
Unit root test
| Variable | Lag | CADF statistic |
|---|---|---|
| GG | 1 | −1.949** |
| D.POLS | 2 | −2.021** |
| GE | 1 | −2.241** |
| D.DC | 1 | −1.375*** |
| BANKZ | 1 | −4.146* |
| INF | 1 | −2.227** |
| GD | 1 | −2.228** |
| UNEM | 1 | −3.397* |
| EB | 1 | −2.196** |
| FDI | 2 | −1.524*** |
| ERT | 1 | −4.928* |
The heterogeneity analysis
| Variable | Group 1 | Group 2 |
|---|---|---|
| D.POLS | 0.10 (0.83) | 0.59 (0.24) |
| GE | −1.81 (0.01**) | −0.69 (0.40) |
| D.DC | 0.03 (0.05***) | −0.00 (0.94) |
| BANKZ | 0.03 (0.49) | −0.16 (0.06***) |
| INF | 0.15 (0.10) | 0.01 (0.89) |
| GD | 0.03 (0.08***) | 0.07 (0.02**) |
| UNEM | −0.01 (0.78) | −0.06 (0.09***) |
| EB | −0.00 (0.74) | 0.0 (0.89) |
| FDI | 0.00 (0.17) | −0.00 (0.39) |
| ERT | 0.00 (0.79) | 0.02 (0.75) |
Hausman, cross-sectional dependence, autocorrelation and heteroscedasticity tests
| Hausman test | p-value: 0.00 |
| Pesaran cross-sectional dependence test | p-value: 0.00 |
| Durbin–Watson | Statistic value: 0.62 |
| Baltagi–Wu | Statistic value: 0.91 |
| Modified Wald test | p-value: 0.00 |
The empirical results of the Arellano, Froot, Rogers estimator
| Variable | Coef. | p-Val. |
|---|---|---|
| D.POLS | 0.31 | 0.32 |
| GE | −1.34 | 0.02** |
| D.DC | 0.03 | 0.06*** |
| BANKZ | 0.12 | 0.72 |
| INF | 0.08 | 0.31 |
| GD | 0.40 | 0.00* |
| UNEM | −0.33 | 0.30 |
| EB | 0.01 | 0.99 |
| FDI | 0.10 | 0.19 |
| ERT | 0.01 | 0.70 |
List of variables
| Variable | Definition | |
|---|---|---|
| GG | Green Growth | Global Green Growth Index |
| POLS | Political Stability and Absence of Violence/Terrorism | Political Stability and Absence of Violence/Terrorism measures perceptions of the likelihood of political instability and/or politically-motivated violence, including terrorism. |
| GE | Government Effectiveness | Government Effectiveness reflects views on the quality of public services, the competence of the civil service and its level of independence from political influences, the effectiveness of policy development and execution and the reliability of the government’s dedication to these policies. |
| DC | Domestic Credit to Private Sector (% of GDP) | Domestic credit to private sector refers to financial resources provided to the private sector by financial corporations, such as through loans, purchases of non-equity securities and trade credits and other accounts receivable, that establish a claim for repayment. |
| BANKZ | Bank Z Scores | It reflects the likelihood of a country’s banking system failing. The Z-score evaluates the strength of a country’s banking system (measured by capitalisation and returns) against the fluctuations of those returns. |
| INF | Inflation, indicated by the consumer price index, shows the yearly percentage change in the expenses that an average consumer incurs to obtain a set of goods and services, which may either remain constant or be adjusted at designated times, like annually. | |
| GD | Government Debt | Government Consolidated Gross Debt% of GDP |
| UNEM | Unemployment Rate | Unemployment, total (% of total labour force) |
| EB | External Balance of Goods & Services% of GDP | The balance of international trade in goods and services is the difference between the exports and imports of goods and services. This indicator is expressed as a percentage of GDP |
| FDI | Foreign Direct Investment | FDI, net inflows/GDP |
| ERT | Green Patent | Patents on environment technologies |
Descriptive statistics
| Variables | Obs. | Mean | Std. Dev. | Min | Max |
|---|---|---|---|---|---|
| GG | 270 | 65.87 | 5.16 | 52.3 | 74.88 |
| POLS | 270 | 0.72 | 0.35 | −0.23 | 1.43 |
| GE | 270 | 1.05 | 0.56 | −0.29 | 2.21 |
| DC | 270 | 82.07 | 41.09 | 24.56 | 254.67 |
| BANKZ | 270 | 15.38 | 10.26 | −0.32 | 57.44 |
| INF | 270 | 1.30 | 1.38 | −2.09 | 5.65 |
| GD | 270 | 70.16 | 39.13 | 8.5 | 209.4 |
| UNEM | 270 | 8.53 | 4.70 | 2.02 | 27.69 |
| EB | 270 | 4.54 | 7.99 | −7.49 | 41.69 |
| FDI | 270 | 16.60 | 66.25 | −296.01 | 452.22 |
| ERT | 270 | 12.74 | 4.63 | 0.84 | 45.20 |