Renewable energy, rents and GDP growth in MENA countries

ABSTRACT

This is an empirical study on the causal relationship between economic growth and renewable energy for MENA countries in a multivariate panel framework over the period 1997–2009 using a fixed effects model with time effects and including combustible waste, employment, fossil fuel consumption, rents and political stability as additional independent variables in the model. Results show that renewable energy affects GDP growth negatively in the long run while there is a short-run bidirectional relationship between renewable energy and fossil fuel energy consumption. In the long run, GDP is affected by rents and political stability. Also, the dynamic effects model provides evidence that for Iraq, there are additional parameters that affect the renewable energy–growth relationship.

KEYWORDS:

• Dynamic model
• fixed effects model
• growth
• MENA countries
• renewable energy