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Renewable, Non-renewable Energy Consumption and Economic Growth Nexus in G7: Fresh Evidence from CS-ARDL

Okumus, İlyas and Guzel, Arif Eser and Destek, Mehmet Akif (2021): Renewable, Non-renewable Energy Consumption and Economic Growth Nexus in G7: Fresh Evidence from CS-ARDL. Published in: Environmental Science and Pollution Research , Vol. 40, No. 28 (2021): pp. 56595-56605.

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Abstract

This study investigates the effects of renewable energy (REN) consumption and non-renewable energy (NREN) consumption on economic growth in G7 countries with annual data covering the period 1980-2016 using a new panel data estimator that provides robust results under cross-sectional dependence, slope heterogeneity, and can be used whether series are integrated in different orders. In addition, the causality between the variables is analyzed with the panel bootstrap Granger causality method takes cross-sectional dependency and slope heterogeneity into account. According to Cross-sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) results, the coefficients of REN and NREN consumption are positive and statistically significant in both the short- and long-run. Furthermore, NREN consumption has a greater impact on enhancing economic growth than REN consumption. The panel bootstrap causality analysis reveals that the growth hypothesis (GH) is valid in REN in Canada, Italy, and the US; neutrality is valid in REN in France, Japan, and the UK; the feedback hypothesis (FE) is valid for REN only in Germany. For NREN, the GH is valid for Canada, France, and Germany; the conservation hypothesis (CH) is valid in Italy and the UK. Finally, the FH is valid in Japan and the US.

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