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Impact of renewable and non-renewable energy consumption on economic growth: New evidence from the MENA Net Oil Exporting Countries (NOECs)

Research paper by Montassar Kahia, Mohamed Safouane Ben Aïssa; Lanouar Charfeddine

Indexed on: 18 Oct '16Published on: 27 Sep '16Published in: Energy



Abstract

Publication date: 1 December 2016 Source:Energy, Volume 116, Part 1 Author(s): Montassar Kahia, Mohamed Safouane Ben Aïssa, Lanouar Charfeddine This study explores the economic growth – energy consumption nexus for two samples of MENA Net Oil Exporting Countries (NOECs) during the period 1980–2012. Using panel cointegration approach, we found strong evidence for the existence of a long-run relationship between real GDP, renewable and non-renewable energy consumption, real gross fixed capital formation, and the labor force. Moreover, empirical results from the estimation of the panel error correction model indicate evidence of a unidirectional causality running from economic growth to renewable energy consumption in the short-run. In the long-run, the results show evidence of a bidirectional causality for the entire group of MENA NOECs. For the 5 selected MENA NOECs sample, we found strong evidence for bidirectional causality between renewable energy and economic growth. Additionally, our results confirm bidirectional causality between renewable and non-renewable energy consumption with negative and significant coefficient in the short-run indicating substitutability between these two types of energy. Finally, the paper discusses the economic implications of the results and proposes certain policies recommendations.