Renewable and non-renewable electricity consumption-economic growth nexus: Evidence from OECD countries

Abstract

In this study, the relationship between renewable and non-renewable electricity consumption and economic growth was examined using data from the 1980-2015 period for 26 OECD countries. The relationship between the variables was examined using two different panel causality approaches in order to make a comparison. Time domain Granger causality tests cannot examine the causality relation at different frequencies. However, frequency domain Granger causality tests examine the causality at different frequencies. While Dumitrescu-Hurlin (2012) panel causality test is time domain causality test, the causality test developed by Croux and Reusens (2013) is the frequency domain causality test. According to the Dumitrescu-Hurlin panel causality test results, bidirectional causality has been determined between non-renewable electricity consumption and economic growth. On the contrary, the Croux and Reusens test results show that there is a bidirectional temporary, and permanent causality between economic growth and renewable-non-renewable electricity consumption. According to this results, for 26 OECD countries, where the feedback hypothesis is valid, policies need to be assessed not only in terms of economic growth, but also in terms of improving electricity energy supply security and environmental quality. Finally, policy-makers should promote the renewable electricity consumption to ensure energy security, reduce energy dependence, and encourage economic growth. (C) 2019 Elsevier Ltd. All rights reserved.