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The Asymmetric Effects of Oil Shocks and Economic Conditions on the Green Economy Index
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Roozbeh Balounejad Nouri   , Amir Ali Farhang *1 , Fatemeh Alizadeh2 |
1- Payame Noor University , s_farhang@pnu.ac.ir
2- Islamic Azad University |
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Abstract: (61 Views) |
This article studies the asymmetric impacts of oil shocks (both demand and supply) and global economic conditions on the Green Economy Index (GEI) across two country groups. high-income and middle-income nations. Utilizing data from 149 countries over the period 2000–2020, the GEI is calculated using the multidimensional index construction approach proposed by Sarma (2015). This index incorporates key dimensions such as reductions in greenhouse gas emissions, investment in renewable energy, energy efficiency, and environmental health, thereby enabling meaningful cross-country comparisons. To analyze long-term impacts, panel econometric models with cross-sectional dependence were employed, using the Fully Modified Ordinary Least Squares (FMOLS) estimation method. The results indicate that the influence of economic and energy-related variables on the GEI is highly dependent on the level of national development. In middle-income countries, economic growth and oil demand shocks are associated with an increase in the GEI—indicating reduced sustainability. Conversely, in high-income countries, the same factors lead to improved sustainability due to the deployment of advanced technologies and more effective environmental policies. Additionally, only in high-income countries do oil supply shocks significantly contribute to improved environmental sustainability. These findings underscore the importance of tailoring environmental and energy policies to each country’s economic structure and development level to fully leverage the potential of the green economy.
JEL Classification: Q56, Q46, C33, C43.
Keywords: Green Economy, Oil Shocks, FMOLS, GEI Index.
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| Keywords: JEL Classification: Q56, Q46, C33, C43.
Green Economy, Oil Shocks, FMOLS, GEI Index. |
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Full-Text [PDF 989 kb]
(81 Downloads)
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Type of Study: paper |
Subject:
Oil Shocks
Received: 2025/05/4 | Accepted: 2025/08/9 | Published: 2026/04/30 | ePublished: 2026/04/30
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