Freedom, finance, and complexity: an exploration of renewable energy transitions in QUAD economies

This study investigates how economic freedom, trade freedom, institutional quality, financial inclusion, and economic complexity influence renewable energy transitions across the QUAD nations. Employing panel data from 2005 to 2022 for QUAD countries, this study utilises CS-ARDL, NARDL, and Dumitrescu-Hurlin causality tests to analyse both symmetric and asymmetric long-run and short-run dynamics. The results reveal that economic freedom, institutional quality, and financial inclusion significantly enhance renewable energy consumption, while trade freedom and economic complexity have adverse effects in the long run. Institutional quality strongly moderates the influence of economic and trade freedom, intensifying their positive impact. Asymmetric analysis shows that both positive and negative shocks in economic liberty and financial inclusion boost renewable energy, but trade freedom shocks reduce it. Economic complexity’s role is context-dependent, sometimes hindering progress. Robustness checks using MG, AMG, and CCEMG validate these findings, confirming heterogeneity and cross-sectional dependencies. Causality tests indicate bi-directional and unidirectional relationships among all core variables. This study uniquely integrates economic and institutional variables into a comprehensive model of renewable energy transition in QUAD nations, accounting for asymmetric effects and moderating roles using advanced panel econometric techniques.