Relationship between R&D investment, financial development, energy use, and carbon dioxide emissions in USA: New insights from ARDL methodology

This study examines the dynamic relationship between research and development (R&D) investment, financial development, energy use, and environmental pollution in the United States over the period 1990–2023, using the Autoregressive Distributed Lag (ARDL) approach. The results confirm a significant long-run cointegration among the variables. Specifically, a 1 % increase in R&D investment reduces CO2 emissions by approximately 0.45 %, whereas a 1 % rise in financial development and energy use increases emissions by 0.21 % and 0.55 %, respectively. The error-correction term indicates that about 63 % of short-run disequilibrium adjusts to the long-run equilibrium annually. These findings highlight that while innovation significantly mitigates environmental degradation, unregulated financial and energy expansion exacerbate it. Policy implications suggest that US authorities should intensify green R&D incentives, promote sustainable financing instruments, and accelerate the transition toward clean energy to achieve national decarbonization targets.