Do health expenditure and human development index matter in the carbon emission function for ensuring sustainable development? Evidence from the heterogeneous panel

This study is an attempt to explain the nexus between health expenditures, GDP, human development index (HDI), CO2 emissions (COEM), renewable energy (RENE), financial development (FD) and electricity consumption (EC) using data from 2000Q1 to 2014Q4 for Brazil, India, China and South Africa. The study applies CIPS and CADF to determine the integration order. The tests confirmed the unique order of integration. The study further uses the Westerlund panel cointegration, which suggests the existence of a long-run relationship. Moreover, the panels dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS) are applied to ascertain the long-run elasticity. The health expenditure and electricity consumption affect the COEM positively. Moreover, HDI and RE affect COEM negatively. The study further confirms the existence of an N-shaped EKC in the long run. The pairwise Dumitrescu and Hurlin, Econ Model 29:1450-1460, (2012) test is used to uncover the direction of the association between the variables. The findings obtained from DH confirm a bidirectional causality between HDI and FD. Likewise, another bidirectional causal relationship has also been found between FD and EC. The findings of our study advocate policies in the direction of HDI and health expenditure by adopting RENE. This study highlights the importance of RENE, which can facilitate a reduction in carbon emissions and decreasing health expenditures. Moreover, the financial sector needs to be improved to create entrepreneurship opportunities for the public in improving the HDI in ensuring sustainable development.