IMPACT OF RENEWABLE ENERGY CONSUMPTION ON ECONOMIC GROWTH: EVIDENCE FROM EUROPEAN UNION COUNTRIES

This study examines the causal relationship between economic growth and renewable energy consumption using data for 28 countries of European Union, taken from Eurostat database for years from 1995 to 2015. In addition, motivated by EU Directive 2009/28/EC, the tendency of the share of renewable ener...

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Bibliographic Details
Published in:Technological and economic development of economy 2018-05, Vol.24 (3), p.914-932
Main Authors: SOAVA, Georgeta, MEHEDINTU, Anca, STERPU, Mihaela, RADUTEANU, Mircea
Format: Article
Language:English
Subjects:
Causality
Economic development
Economic growth
Economics
Empirical analysis
Energy consumption
final energy consumption
FMOLS
Granger causality
Impact analysis
panel countries
Regression analysis
Renewable energy
renewable energy consumption
Renewable resources
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Summary:This study examines the causal relationship between economic growth and renewable energy consumption using data for 28 countries of European Union, taken from Eurostat database for years from 1995 to 2015. In addition, motivated by EU Directive 2009/28/EC, the tendency of the share of renewable energy consumption into the final energy consumption is analysed. Various panel data techniques implemented in EViews are used. The empirical results suggest a positive impact of renewable energy consumption on economic growth, and emphasize bidirectional or unidirectional Granger causalities between the two macroeconomic indicators, for each country in the panel. These results justify the political decisions of EU concerning the necessity of increasing the renewable energy consumption, and prove that this type of energy consumption has a strong positive impact on economic growth. Thus, the inclusion of such policies in future EU and national strategies is further motivated. Finally, by means of linear regression, an increasing trend was found for the ratio between renewable energy consumption and final energy consumption for all but one of the EU countries.
ISSN:2029-4913
2029-4921
DOI:10.3846/tede.2018.1426