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Economic Diversification, Oil Revenue and Energy Transition in Oil Dependent Countries: A Wavelet Decomposition and Panel Data Approach

Author

Listed:
  • Salem Hathroubi

    (Imam Mohammad IBN Saud Islamic University, Saudi Arabia)

  • Chaker Aloui

    (Prince Sultan University, Saudi Arabia)

  • Hela Ben Hamida

    (Imam Mohammad IBN Saud Islamic University, Saudi Arabia)

Abstract

In oil-dependent countries, the energy transition process is ongoing and it appeals substantial and necessary adjustments in terms of diversification. We attempt to provide a systematic analysis of the connectedness between energy transition, oil revenue and economic diversification using novel econometric approach, wavelet decomposition and panel data estimation. Our attention will be focused on the dynamics and causal relationships between energy transition process and economic diversification by checking the role of oil revenue. We use second generation unit roots, and a particular attention is given to cross-sectional dependence of the series. Results show that correlations between wavelet components are absent in the short term, weak in the medium term, and moderate in the long-run. Causality tests support a bidirectional causality between economic diversification and energy transition and between economic diversification and net oil revenue, in the medium and long-run scale levels. Our results would have several prominent implications for policy makers, in oil-dependent countries, when designing energy transitions and economic diversifications strategies, and gives and insightful look about the future of these countries.

Suggested Citation

  • Salem Hathroubi & Chaker Aloui & Hela Ben Hamida, 2024. "Economic Diversification, Oil Revenue and Energy Transition in Oil Dependent Countries: A Wavelet Decomposition and Panel Data Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 14(5), pages 447-456, September.
    • Handle: RePEc:eco:journ2:2024-05-46
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    More about this item

    Keywords

    Energy Transition; Oil Revenue; Economic Diversification; Wavelet Decomposition; Panel Data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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