The Unassuming Economist

From a paper by Md Qamruzzaman, Md. Adnan Hoque, and Md. Ratib Khan:

“This study examines the impact of renewable energy consumption, financial globalisation, digitisation, trade freedom, and financial development on income inequality across the G7, E7, and N11 economies from 1990 to 2022. Using CS-ARDL as the baseline estimator to account for cross-sectional dependence and long-run dynamics, the analysis is reinforced with the AMG, CCEMG, and Driscoll–Kraay estimators for robustness, while the dynamic panel GMM addresses potential endogeneity. Nonlinear and distributional heterogeneity were explored using Panel Threshold Regression, Quantile Regression (QR-MM), and Markov Switching models. The results consistently indicate that renewable energy, digitisation, financial globalisation, and trade freedom contribute to reducing income inequality, whereas financial development exacerbates disparities, with the effects being more pronounced in emerging economies (E7 and N11) than in advanced economies (G7). Threshold and quantile analyses reveal that renewable energy and digitisation exert more substantial equalising effects once institutional quality and digital penetration surpass critical levels under conditions of higher inequality. Regime-switching estimations showed a stabilising role during economic stress. These findings suggest that expanding renewable energy and digital infrastructure, and maintaining open trade policies, can help mitigate inequality, particularly in emerging economies, though the benefits of financial development require inclusive frameworks and regulatory safeguards. By integrating multiple advanced econometric techniques, this study provides new evidence on the interconnected roles of globalisation, the energy transition, and digital transformation in shaping income distribution across different economic contexts.”