Economic growth, fossil fuel and non-fossil consumption: a Pooled Mean Group analysis using proxies for capital

Asafu-Adjaye, John, Byrne, Dominic and Alvarez, Maximiliano (2016) Economic growth, fossil fuel and non-fossil consumption: a Pooled Mean Group analysis using proxies for capital. Energy Economics, 60 345-356. doi:10.1016/j.eneco.2016.10.016


Author Asafu-Adjaye, John
Byrne, Dominic
Alvarez, Maximiliano
Title Economic growth, fossil fuel and non-fossil consumption: a Pooled Mean Group analysis using proxies for capital
Journal name Energy Economics   Check publisher's open access policy
ISSN 0140-9883
1873-6181
Publication date 2016-11-01
Sub-type Article (original research)
DOI 10.1016/j.eneco.2016.10.016
Open Access Status Not yet assessed
Volume 60
Start page 345
End page 356
Total pages 12
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Collection year 2017
Language eng
Abstract This study employs a Pooled Mean Group estimator to examine the nexus between economic growth and fossil and non-fossil fuel consumption for 53 countries between 1990 and 2012. The global sample was divided into four categories: developed exporters, developed importers, developing exporters and developing importers. The purpose of these categories was to observe whether factors unique to these countries influence the relationship between energy consumption and economic growth. With the exception of developing importers, evidence of bi-directional causality between fossil fuel consumption and real GDP across all subsamples is observed. This leads to the conclusion that efforts to directly conserve fossil fuels may harm economic growth. In terms of non-fossil fuel use, the results are more diverse. Bi-directional causality between non-fossil fuel use and real GDP is found in the long and short run for developed importers; bi-directional causality only in the long run for developed exporters; negative long-run causality from real GDP to non-fossil fuels for developing exporters; and long-run causality from non-fossil fuel use to real GDP for developing importers. These results lead to the conclusion that other factors have been responsible for the progress seen in non-fossil fuel use. Thus it is concluded that economic growth on its own is insufficient to promote clean energy development. There is a need for policy makers to create an environment conducive to renewable energy investment.
Keyword Economic growth
Fossil fuel consumption
Granger causality
Non-fossil fuel consumption
Pool Mean Group estimation
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ
Additional Notes Published online 28 October 2016. Accepted manuscript

Document type: Journal Article
Sub-type: Article (original research)
Collections: HERDC Pre-Audit
School of Economics Publications
 
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