The effect of renewable energy consumption on economic growth: Evidence from top 38 countries

Mita Bhattacharya, Sudharshan Reddy Paramati, Ilhan Ozturk, Sankar Bhattacharya

    Research output: Contribution to journalArticle

    384 Citations (Scopus)

    Abstract

    This research aims to investigate the effects of renewable energy consumption on the economic growth of major renewable energy consuming countries in the world. Using the Renewable Energy Country Attractiveness Index developed by the Ernst & Young Global Limited, we choose 38 top renewable energy consuming countries to explain the growth process between 1991 and 2012. With panel estimation techniques, our findings establish cross-sectional dependence and heterogeneity across the countries. We confirm the evidence of long-run dynamics between economic growth, and traditional and energy-related inputs. Findings from long-run output elasticities indicate that renewable energy consumption has a significant positive impact on the economic output for 57% of our selected countries. For robustness, we also carried out time-series analyses of long-run output elasticities. Our findings suggest that governments, energy planners, international cooperation agencies and associated bodies must act together in increasing renewable energy investment for low carbon growth in most of these economies.

    Original languageEnglish
    Pages (from-to)733-741
    Number of pages9
    JournalApplied Energy
    Volume162
    Early online date11 Nov 2015
    DOIs
    Publication statusPublished - 15 Jan 2016

    Keywords

    • FMOLS
    • GDP growth
    • Heterogeneous panel
    • Low-carbon economies
    • Renewable energy
    • Renewable Energy Country Attractiveness Index

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