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Renewable and non-renewable energy consumption and economic activities: Further evidence from OECD countries

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  • Salim, Ruhul A.
  • Hassan, Kamrul
  • Shafiei, Sahar

Abstract

This article examines the dynamic relationship between renewable and non-renewable energy consumption and industrial output and GDP growth in OECD countries using data over the period of 1980–2011. The panel cointegration technique allowing structural breaks is used for empirical investigation. The results show that there is a long-term equilibrium relationship among non-renewable and renewable energy sources, industrial output and economic growth. The panel causality analyses show bidirectional causality between industrial output and both renewable and non-renewable energy consumption in the short and long run. However, there is evidence of bidirectional short-run relationship between GDP growth and non-renewable energy consumption while unidirectional causality between GDP growth and renewable energy consumption. These results indicate that OECD economies still remain energy-dependent for their industrial output as well as overall economic growth. However, expansion of renewable energy sources is a viable solution for addressing energy security and climate change issues, and gradually substituting renewable to non-renewable energy sources could enhance a sustainable energy economy.

Suggested Citation

  • Salim, Ruhul A. & Hassan, Kamrul & Shafiei, Sahar, 2014. "Renewable and non-renewable energy consumption and economic activities: Further evidence from OECD countries," Energy Economics, Elsevier, vol. 44(C), pages 350-360.
    • Handle: RePEc:eee:eneeco:v:44:y:2014:i:c:p:350-360
    DOI: 10.1016/j.eneco.2014.05.001
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    More about this item

    Keywords

    Cobb–Douglas production function; Renewable energy consumption; Non-renewable energy consumption; Real GDP; Industrial output;
    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
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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