EconPapers    
Economics at your fingertips  
 

Testing for VECM Granger Causality and Cointegration Between Economic Growth and Renewable Energy: Evidence from MENA Net Energy Importing Countries

Badry Hechmy
Additional contact information
Badry Hechmy: University of Tunis el Manar

Econometric Research in Finance, 2019, vol. 4, issue 2, 111-131

Abstract: This paper employs several techniques to study the relationship between renewable energy consumption and economic growth in Net Energy Importing Countries in the Middle East and North Africa (MENA-NEICs) during the period from 2001 to 2015. Panel cointegration test shows that there is a long-term cointegration relationship between those variables. However, the Granger causality test in VECM shows that this relationship is bidirectional in the short and long term. Thus, MENA-NEICs must encourage the deployment of renewable energies to the detriment of fossil fuels. To this end, an investment incentive is suggested in this sector, which will be medium and long-term market-based. In the short term, a transitional stage of a mixed and dynamic approach consisting of a program of partial subsidies for renewable energy production and partial adjustment of fossil fuel prices that is progressively moving towards a final stage where subsidies to energy will be completely removed is suggested. In this way, these countries can make the trade-off between fiscal sustainability and political stability.

Keywords: renewable energy; economic growth; cointegration test; causality test; VECM; MENA-NEIC (search for similar items in EconPapers)
JEL-codes: C23 C33 Q43 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://erfin.org/journal/index.php/erfin/article/view/58 Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sgh:erfinj:v:4:y:2019:i:2:p:111-131

Access Statistics for this article

Econometric Research in Finance is currently edited by Dobromił Serwa

More articles in Econometric Research in Finance from SGH Warsaw School of Economics, Collegium of Economic Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Dobromił Serwa ().

 
Page updated 2020-01-25
Handle: RePEc:sgh:erfinj:v:4:y:2019:i:2:p:111-131