The energy-growth nexus revisited: An analysis of different types of energy

Abstract

This study revisits the nexus between energy consumption and economic growth by considering several energy use types (i.e., total energy, fossil fuel energy, and renewable energy). For this purpose, a dynamic fixed effects (DFE) estimator is applied to the autoregressive distributed lag (ARDL) model built on an extended version of the neoclassical production function. This study examines a global sample of 107 countries during 1996–2014, classified into three subsamples of countries based on income level. Overall, the findings show that, in the short run, the use of total energy and fossil fuel energy significantly and positively contribute to higher income in total and per-capita terms. However, the growth effects of renewable energy consumption appear to vary across subsamples. In the long run, the impacts of energy on economic growth are mostly insignificant, supporting the view that conservative energy policies do not harm economic growth.