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The Causal Links between Economic Growth, Renewable Energy, Financial Development and Foreign Trade in Gulf Cooperation Council Countries

Author

Listed:
  • Mustapha Ben Hassine

    (Department of Economics, College of Economics and Business Administration, Al-Imam University, Saudi Arabia,)

  • Nizar Harrathi

    (Department of Economics, College of Business Administration, King Saud University, Saudi Arabia.)

Abstract

This paper examines the causal relationship between renewable energy consumption, real gross domestic product, trade and financial development (FD) for the Gulf Cooperation Council (GCC) countries during the period 1980-2012. Compared to the previous studies, our models are extended by including the FD as macroeconomic factor. The results indicate bidirectional causality in both short and long-run between output and exports. While, there is no evidence of causality in the short-run between output and renewable energy consumption or private sector credit and between exports and renewable energy consumption or private sector credit. Moreover, the long-run estimated results indicate that there is evidence of a statistically significant impact of renewable energy consumption, exports and private sector credit on output. Our finding indicates that renewable energy use and exports are able to increase the economic growth for the GCC countries. Nevertheless, we find negative impact of the FD on economic growth related to the deflationary monetary policy of the considered countries.

Suggested Citation

  • Mustapha Ben Hassine & Nizar Harrathi, 2017. "The Causal Links between Economic Growth, Renewable Energy, Financial Development and Foreign Trade in Gulf Cooperation Council Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 7(2), pages 76-85.
    • Handle: RePEc:eco:journ2:2017-02-11
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    References listed on IDEAS

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    More about this item

    Keywords

    Granger Causality; Panel Cointegration; Renewable Energy Consumption; Economic Growth; Financial Development; Trade; Gulf Cooperation Council Countries;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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