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Renewable and non-renewable energy consumption and economic growth in G7 countries: evidence from panel autoregressive distributed lag (P-ARDL) model

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Abstract

This paper aims to investigate the relationship between renewable and non-renewable energy consumption and economic growth in the G7 countries (Canada, France, Germany, United Kingdom, Italy and the United States) for the period of 1990–2015. The study used the Pesaran CADF panel second generation unit root test to verify the stationary properties of the variables. To examine the short-run and long-run dynamics the study employed panel autoregressive distributed lag (P-ARDL) model. The empirical findings suggest that there is a presence of cross-sectional dependency among the variables. The panel ARDL model confirms that energy price, labor force, and capital stock have positive and statistically significant long-run impact on economic growth in the G7 countries. The short run dynamics of the result recommend that there is a short run causality between non-renewable energy consumption and economic growth and capital stock to economic growth. The Hausman test found that PMG is more efficient than MG and DFE.

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Notes

  1. Capital stock data are not readily available in official statistics. Therefore, we use the gross fixed capital formation as a proxy for capital stock. See (Soytas, Sari, and Ewing, (2007).

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  1. School of Economics, University of Hyderabad, P.O. Central University, Prof. C. R. Rao Road, Gachibowli, Hyderabad, Telangana, 500046, India

    Jaganath Behera & Alok Kumar Mishra

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  1. Jaganath Behera
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  2. Alok Kumar Mishra
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Correspondence to Alok Kumar Mishra.

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Behera, J., Mishra, A.K. Renewable and non-renewable energy consumption and economic growth in G7 countries: evidence from panel autoregressive distributed lag (P-ARDL) model. Int Econ Econ Policy 17, 241–258 (2020). https://doi.org/10.1007/s10368-019-00446-1

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