Investment in renewable energy resources, sustainable financial inclusion and energy efficiency: A case of US economy

The World Bank has identified that energy efficiency as a vital enabler for most of the Sustainable Development Goals. Its role in restricting CO2 emissions is astonishing. In recent years, the importance of identifying the determinants of energy efficiency has acknowledged huge importance from the environmentalists. This study expands the horizon of this debate by introducing new potential determinants of energy efficiency considering the evidence of the USA economy. We have studied the impact of investment in renewable energy resources, financial inclusion, industrial production, and trade openness on energy efficiency in the case of the USA over the period of 1990 to 2020. Additionally, this study contributes to the literature by exploring the causal relationship among variables by taking into account the time dimension. The results show that industrial production, financial inclusion, renewable energy public R & D and trade openness are important factors of energy efficiency in the USA. Except for industrial production, all other variables are positively related to energy efficiency. The direction of causality is confirmed from energy efficiency to financial inclusion, industrial production, Renew-able energy public RD & D budget and trade openness. The results show that a shock in energy efficiency has implications for all variables at different frequencies. We suggest that policymakers must introduce proper policies to improve the financial system, which has important implications for renewable energies.