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The Effect of Renewable and Fossil Fuel Energy Consumption on Total Factor Productivity in G20 Countries

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  • Buket Altınöz

Abstract

The aim of this study is to examine the effect of both renewable and fossil fuel energy consumption on total factor productivity in G20 countries by using fixed effects with Driscoll and Kraay standard errors approach. Analysis results suggest that renewable energy consumption has a positive impact on total factor productivity in the long run. Accordingly, an increase in renewable energy consumption increases the total factor productivity by about 0.007 percent in the long run. Although the coefficient of fossil fuel energy consumption is positive, it is statistically insignificant. In this study, labor force and capital are included in model as control variables. While capital formation increases total factor productivity in the long run, total labor force decreases it. The results highlight the necessity of including renewable energy consumption and capital accumulation in possible policies to increase total factor productivity. Moreover, revising energy consumption policies to encourage renewable sources may be one of the priorities of policymakers to increase the positive impact of renewable energy consumption.

Suggested Citation

  • Buket Altınöz, 2021. "The Effect of Renewable and Fossil Fuel Energy Consumption on Total Factor Productivity in G20 Countries," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 6(SI), pages 54-64.
    • Handle: RePEc:ahs:journl:v:6:y:2021:i:si:p:54-64
    DOI: 10.30784/epfad.1020967
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    References listed on IDEAS

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    More about this item

    Keywords

    Total Factor Productivity; Energy; Panel Data; Cointegration;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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