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Dynamic linkages between non-renewable energy, renewable energy and economic growth through nonlinear ARDL approach: evidence from Malaysia

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Abstract

The purpose of this paper is to investigate the links between renewable energy (RE), non-renewable energy (NRE), capital, labour and economic growth, using the nonlinear autoregressive distributive lag (NARDL) model in Malaysia for the period of 1980–2018. The results of NARDL confirm the asymmetric effect of RE and NRE consumption on the economic growth in the long run as well as the short run in Malaysia. The findings also show that in the long and short run, positive shocks of NRE are greater than the positive shocks of RE. It indicates that Malaysia’s economic growth is highly dependent on NRE which is not a good indication as NRE consumption increases carbon dioxide (CO2) emission in the country. Moreover, the empirical results of this study demonstrated that RE consumption reduction accelerates economic growth, whereas NRE consumption reduction decreases economic growth. It can have claimed that in Malaysia, RE is still more expensive than NRE. In conclusion, this study offered a variety of measures to develop RE to reduce the dependency on NRE consumption.

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Fig. 1
Fig. 2

source in terms of millions of tons of oil is shown in (A) and CO2 emission (kt) and total energy demand (millions of tons) in Malaysia during 2006 to 2018 is shown in (B). Source: Authors’ own calculations using MS excel based on data retrieved from https://www.worlddata.info/asia/malaysia/energy-consumption.php

Fig. 3

Source: Energy Commission Malaysia, 2019

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Data availability

The data sets used and/or analysed during the current study are available from the corresponding author on reasonable request.

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Acknowledgements

The authors would like to acknowledge the P-RIGS funding of “Digital development, Economics Growth. Environmental Sustainability and Population Health in Malaysia: Applying Response Surfaces for the F-test of cointegration model” (Ref no: P-RIGS18-006-006).

Funding

Ministry of Higher Education,Ref no: P-RIGS18-006–006,Rafia Afroz

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Authors and Affiliations

  1. Department of Economics, Faculty of Economics and Management Science, International Islamic University Malaysia, Kuala Lumpur, Malaysia

    Rafia Afroz & Md Muhibbullah

Authors
  1. Rafia Afroz
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  2. Md Muhibbullah
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Contributions

Dr Rafia Afroz: She did the data analysis and wrote the Results and Conclusion.

Md Muhibbullah: He wrote the Introduction, Literature review and Methodology.

Corresponding author

Correspondence to Rafia Afroz.

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Afroz, R., Muhibbullah, M. Dynamic linkages between non-renewable energy, renewable energy and economic growth through nonlinear ARDL approach: evidence from Malaysia. Environ Sci Pollut Res 29, 48795–48811 (2022). https://doi.org/10.1007/s11356-022-19346-0

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  • DOI: https://doi.org/10.1007/s11356-022-19346-0

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