Role of Institutional Quality in Green Technology-Carbon Emissions Nexus

This paper analyzed the relationships among green technology, institutional quality and carbon emissions in 138 countries from 2000 to 2019. Hansen’s (Econometrica, 68, 575–603, 2000) panel threshold analysis determined the institutional quality needed for green technology to reduce carbon emissions. We determined the threshold beyond which green technology influences carbon emissions and the role of institutional quality in the green technology-carbon emissions nexus. The threshold effect of institutional quality on green technology and carbon emission was found. Again, institutional quality impacts the green technology-carbon emissions more beyond the institutional quality threshold. The current study implies that countries need to ensure political stability to encourage green technology investments, promote a strong legal and regulatory regime that enforces environmental laws and investor property rights, reduce corruption, and improve government efficiency and effectiveness.