Alternative energy and growth in BRIC countries

ABSTRACT

This is an empirical study on the causal relationship between economic growth and alternative energy for BRIC¹ countries in a multivariate panel framework over the period 1992–2008 using a fixed effects model with time effects and including greenhouse gas emissions, trade, capital, and employment as additional independent variables in the model. The results are also compared with a counterpart full energy model which comprises all types of energy consumption. The results from both models confirm causality between both alternative energy and full energy and GDP providing evidence for the feedback hypothesis which can be the situation in emerging economies which are not energy efficient. Also, the dynamic effects model provides evidence that in Russia and China, there are additional parameters that affect the alternative energy or full energy and growth relationship.

Keywords:

• Alternative energy
• BRIC countries
• dynamic model
• fixed effects model
• growth

Notes

¹ BRIC is an acronym for Brazil, Russia, India and China coined by Jim O’Neill of Goldman Sachs in 2001.