Renewable energy consumption and economic growth in newly industrialized countries: Evidence from asymmetric causality test

Highlights

The relationship between renewable energy consumption and real GDP is examined.

Results reveal that renewable energy consumption and real GDP are cointegrated.

Renewable energy consumption is the optimum in India.

The neutrality hypothesis is supported in Brazil and Malaysia.

Abstract

In this study, the relationship between renewable energy consumption and economic growth in newly industrialized countries is examined for the period from 1971 to 2011. In previous studies, the causal relationship between variables was performed by the validity of the assumption of positive shocks. This study employs the asymmetric causality approach to investigate the relationship between positive and negative shocks of variables. The results reveal that negative shocks in renewable energy consumption causes positive shocks in real GDP for South Africa and Mexico; negative shocks in renewable energy consumption causes negative shocks in real GDP for India. In addition, the neutrality hypothesis is confirmed for Brazil and Malaysia.

Keywords

  • Renewable energy consumption;
  • Newly industrialized countries;
  • Asymmetric causality

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