The causal relationship between renewable energy consumption and economic growth: Evidence from the G7 countries

Tsangyao Chang, Rangan Gupta, Roula Inglesi-Lotz, Beatrice Desiree Simo-Kengne (), Devon Smithers () and Amy Trembling ()
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Devon Smithers: Department of Economics, University of Pretoria
Amy Trembling: Department of Economics, University of Pretoria

No 201372, Working Papers from University of Pretoria, Department of Economics

Abstract: This paper examines the causal relationship between renewable energy consumption and economic growth for the G7 countries using annual data from 1990 to 2011. We implement a bootstrap panel causality procedure which allows us to circumvent the data limitation while accounting for the heterogeneity and cross sectional dependency issues that arise in panel data analysis. Empirical results provide evidence of a bidirectional causality between economic growth and renewable energy; suggesting that renewable energy expansion might help improve the economic performance of the G7 countries. Conversely, individual country results support a unidirectional causality running from economic growth to renewable energy for France and the UK; the reverse causality for Japan and no causality in any direction between the two variables for the remaining countries.

Keywords: Renewable energy; Economic Growth; Dependency and Heterogeneity; Panel Causality (search for similar items in EconPapers)
JEL-codes: C32 C33 Q42 Q43 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2013-11
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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201372

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