Renewable Energy, Output, Carbon Dioxide Emissions, and Oil Prices: Evidence from South America

Abstract

This study utilizes panel cointegration techniques to estimate the long-run relationship as well as the causal dynamics between renewable energy consumption per capita, real gross domestic product (GDP) per capita, carbon dioxide emissions per capita, and real oil prices for a panel of 11 South American countries over the period 1980 to 2010. Specifically, we find the long-run elasticity estimates are positive and statistically significant with respect to real GDP per capita, carbon emissions per capita, and real oil prices. The results of the panel error correction model reveal a feedback relationship among the variables in question, indicative of the importance of renewable energy consumption in both the growth of output and the containment of carbon dioxide emissions.

Keywords:

• carbon dioxide emissions
• oil prices
• renewable energy
• South America

Notes

¹ Details of the respective panel unit root tests are not presented to conserve space, but are available upon request.

² See Pedroni (1999, 2004) for details on the heterogeneous panel and group mean panel cointegration statistics.

³ The estimates from either FMOLS or dynamic ordinary least squares are asymptotically equivalent for more than 60 observations (Banerjee, 1999).