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Renewable energy consumption and industrial production: A disaggregated time-frequency analysis for the U.S

Thi Hong Van Hoang, Syed Jawad Hussain Shahzad and Robert Czudaj ()

Energy Economics, 2020, vol. 85, issue C

Abstract: This paper aims to analyze the interaction between renewable energy consumption and industrial production for the U.S. over the 1981–2018 period. We contribute to the existing literature by the disaggregation of renewable energy sources (hydropower, geothermal, and biomass), by the consideration of time and frequency through wavelet techniques and the time-varying Granger causality test recently proposed by Shi et al. (2018). Based on monthly data, wavelet results show a positive co-movement between industrial production and biomass energy consumption at low frequencies, meaning in the long term only. The bootstrap rolling-window Granger causality test indicates a bi-directional predictability between renewable energy consumption and industrial production in crisis and turmoil periods only. These results are found to be robust to the inclusion of control variables (non-renewable energy consumption and crude oil prices) and to the selection of the lag length for the corresponding VAR model.

Keywords: Renewable energies; Disaggregated sources; Industrial production; U.S.; Wavelet; Granger causality; Rolling-window (search for similar items in EconPapers)
JEL-codes: Q2 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.eneco.2019.06.018

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