Biomass energy consumption and economic growth: Evidence from top 10 biomass consumer countries

ABSTRACT

This study aims to investigate the economic efficiency of biomass energy consumption for the period 1980–2013 in top 10 biomass energy consumer countries. For this purpose, this study uses both augmented mean group (AMG) estimator and panel bootstrap causality method which are suitable for dependent and heterogeneous panels. The results of AMG estimator show that economic growth is positively affected by biomass energy use in Brazil, China, Finland, Germany, Italy, and Sweden. In addition, empirical findings from panel bootstrap causality test show that the growth hypothesis is valid for Brazil, Germany, India, and Italy; the conservation hypothesis is supported in Sweden; the feedback hypothesis is confirmed in China and the United States; and the neutrality hypothesis is valid in Finland, Japan, and the United Kingdom.

KEYWORDS:

• Biomass
• bootstrap causality
• dependency
• economic growth
• energy consumption
• heterogeneity

Notes

¹ The growth hypothesis is valid in case there is unidirectional causality from biomass energy consumption to economic growth; the conservation hypothesis is valid when there is evidence of the unidirectional causality from economic growth to biomass energy consumption; the feedback hypothesis is confirmed in a situation when there is bidirectional causal linkage between biomass energy consumption and economic growth; and the neutrality hypothesis is supported when there is no any causal connection between biomass energy use and economic growth.