The impact of public debt on environmental quality in EU countries

It is known that environmental pollution has reached very high levels at the universal level in recent years. It is seen that many initiatives have been made at the national and international level to combat environmental pollution. Especially when the initiatives of EU countries regarding environmental pollution are examined, it is seen that reducing environmental pollution has become a legal obligation in these countries. On the other hand, these countries are investing in environmentally friendly energy technologies in order to reduce their energy dependence on Russia. In addition to the important role of taxes and expenditures in investing in these technologies, public debts can also be an important tool in increasing environmental quality. The debt taken has a strong effect on the economic growth of the country and can affect environmental quality.This study investigates the effect of public debt and economic growth on the load capacity factor in 20 EU countries for the period 1995-2021. In this study, the presence of cross-sectional dependence in the YKE model and series used was analyzed with tests. In this framework, cross-sectional dependence was investigated through three basic tests (CDLM1, CDLM2 and CD). It was determined that there was cross-sectional dependence in the YKE model and series. Then, Pesaran and Yamagata (2008) delta test was applied to determine the slope coefficients and the existence of heterogeneous slopes was found. Pesaran CIPS unit root test was applied to determine the stationarity levels of the variables and the series became stationary in the first difference. Long-term relationship was investigated with Durbin - Hausman panel cointegration test and cointegration relationship was found between the variables. Long-term coefficient estimates for this cointegration relationship were tested for the panel and countries with AMG and DCCE methods. Emirmahmutoglu - Kose panel causality test was used to investigate the short-term relationship in the study. Finally, test findings were analyzed and policy recommendations were presented.