Renewable Energy and Fiscal Resilience: Unlocking the Path to Sustainable Economic Stability

Abstract

This study investigates the impact of renewable energy consumption and renewable electricity output on total debt stock in 30 countries from 1990 to 2022, providing valuable insights into how sustainable energy transitions influence economic stability. Using advanced panel data techniques, including the Generalized method of moments (GMM), the research explores both short-and long-term relationships between Renewable energy consumption, renewable electricity output, and total debt stock. The findings indicate a significant positive relationship between Renewable energy consumption, renewable electricity output, and total debt stock, suggesting that while renewable energy investments initially raise debt levels, they enhance fiscal resilience and economic stability in the long run by reducing reliance on fossil fuels and promoting sustainable development. Policymakers are encouraged to implement incentives, strengthen regulatory frameworks, and foster international cooperation to accelerate renewable energy adoption. Financial institutions should design innovative green financing mechanisms, while researchers are urged to explore the socioeconomic and geopolitical dynamics of renewable energy transitions. This study offers novel contributions to renewable energy economics, bridging the gap between energy transitions and fiscal sustainability, and provides actionable recommendations for aligning energy policies with economic and environmental objectives.