Output, renewable and non-renewable energy production, and international trade: Evidence from EU-15 countries

HALICIOGLU, Ferda and Ketenci, Natalya (2018): Output, renewable and non-renewable energy production, and international trade: Evidence from EU-15 countries.

Abstract

This research presents first empirical evidence on the dynamic relationship between output, renewable and non-renewable energy production, international trade, capital and labour in the case of the EU-15 countries over the period of 1980-2015 for individual countries as well as a group. A simple production function of capital and labour is extended as such that it incorporates the impact of renewable and non-renewable energy inputs, and international trade on output level. Econometric estimations of the extended production equations are carried out via ARDL approach to cointegration for individual country cases and panel GMM econometric technique for the entire EU-15. The ARDL empirical results indicate the existence of cointegration relationships amongst the variables in the case of seven countries of the EU-15, in addition to the GMM based, long-run relationship for the entire EU-15 as a panel. The ARDL procedure suggests that the relative impact of renewable and non-renewable energy inputs on output levels vary considerably for individual countries. The GMM results demonstrate the existence of the relative importance of renewable and non-renewable energy inputs along with international trade on output in the EU-15 countries. This paper also discusses policy implications of the empirical results, as well as offering policy recommendations.

• Item Type: MPRA Paper
• Language: English
• Keywords: Output, International trade, renewable and non-renewable energy, Cointegration, EU-15 countries
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; F - International Economics > F1 - Trade > F18 - Trade and Environment; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy

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