Do digital technology and political risk reduce CO2 emissions inequality in OECD economies? Panel evidence

This study examines the effect of digital technology and political risk on carbon dioxide (CO₂) emissions inequality within a panel sample of 32 OECD countries from 1997 to 2019. To examine the above nexus, the current study controls for primary energy consumption, economic growth, and urbanisation in baseline models. The long-run results from the Pooled Mean Group-Autoregressive Distributed Lag (PMG-ARDL) Method indicate that 1 % increase in digitalisation and political risk, respectively, reduces CO₂ emission inequality by 0.026 % and 0.26 %. Meanwhile, in the presence of political risk, a 1 % increase in digitalisation lessens the CO₂ emission inequality by 0.01 %. Furthermore, results also show that 1 % increase in primary energy consumption and economic growth, respectively, raises the CO₂ emission inequality by 0.51 % and 0.11 %. Conversely, a 0.6 % decrease in emission inequality is noticed for 1 % increase in urbanisation. These findings are robust across alternative digitalisation (i.e., information globalisation) and political risk (i.e., institutional quality) variables as well as the Panel Corrected Standard Errors (PCSE) method. In robustness analysis, renewable and non-renewable energy consumption are treated as separate control variables, revealing that renewable energy consumption reduces CO₂ emission inequality, whereas non-renewable energy consumption exacerbates it. These findings offer policy implications for OECD economies on curbing CO₂ emission inequality.