Renewable Energy, Oil Prices, and Economic Activity: A Granger-causality in Quantiles Analysis
Victor Troster (),
Muhammad Shahbaz () and
Gazi Uddin ()
MPRA Paper from University Library of Munich, Germany
This paper analyzes the causal relationship between renewable energy consumption, oil prices, and economic activity in the United States from July 1989 to July 2016, considering all quantiles of the distribution. Although the concept of Granger-causality is defined for the conditional distribution, the majority of papers have tested Granger-causality using conditional mean regression models in which the causal relations are linear. We apply a Granger-causality in quantiles analysis that evaluates causal relations in each quantile of the distribution. Under this approach, we can discriminate between causality affecting the median and the tails of the conditional distribution. We find evidence of bi-directional causality between changes in renewable energy consumption and economic growth at the lowest tail of the distribution; besides, changes in renewable energy consumption lead economic growth at the highest tail of the distribution. Our results also support the unidirectional causality from fluctuations in oil prices to economic growth at the extreme quantiles of the distribution. Finally, we find evidence of lower-tail dependence from changes in oil prices to changes in renewable energy consumption. Our findings call for government policies aimed at developing renewable energy markets, to increase energy efficiency in the U.S.
Keywords: Granger-causality; Quantile Regression; Oil Prices; Renewable Energy Consumption; Economic Growth (search for similar items in EconPapers)
JEL-codes: A1 (search for similar items in EconPapers)
Date: 2018-01-04, Revised 2018-01-19
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19) Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/84194/1/MPRA_paper_84194.pdf original version (application/pdf)
Journal Article: Renewable energy, oil prices, and economic activity: A Granger-causality in quantiles analysis (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:84194
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().