The Long-run Relationship Between Renewable Electricity Consumption and GDP: Evidence From Panel Data

Abstract

The article examines whether a long-run relationship between per capita renewable electricity consumption and gross domestic product (GDP) exists employing panel integration and cointegration techniques for a dynamic heterogeneous panel of 19 Organisation for Economic Co-operation and Development countries over the period 1980–2008. Our findings support the existence of a long-run equilibrium relation between renewable electricity consumption and GDP. Further, the evidence points to unidirectional causality from a GDP to renewable electricity consumption.

Keywords:

• panel causality
• panel cointegration
• renewable electricity consumption

Notes

¹Unlike the energy consumption-GDP nexus literature, Sadorksy (2009b) estimates an empirical model of renewable energy consumption for G7 countries. He concludes that the long-term increases in real GDP per capita and CO₂ per capita are major drivers behind per capita renewable energy consumption for G7 countries.