Asymmetric Effects of Consumption of Renewable and Nonrenewable Energies on Human Development Index

Abstract

This paper investigates the asymmetric short and long-run effects of the consumption of renewable (biomass and biogas and hydro) and nonrenewable energies (oil and natural gas) on the human development index, a proxy of sustainable development. Reaching this goal, the study uses NARDL (Nonlinear Autoregressive Distributive Lag Model) model with yearly data from 1990 to 2018. It also investigates the effect of nuclear sanction on the human development index. The results show consumption of hydro energies has no effect on the human development index neither in the short-run nor in the long run while the consumption of biomass and biogas positively affects the human development index. A reduction in crude oil consumption negatively affects the human development index in both the short and the long run. However, a unit reduction in natural gas consumption reduces the human development index in both the short and long run. The results also indicate natural gas has by far a stronger effect on the human development index that may be due to the abundance of this resource in Iran. Human development index has not significantly influenced by sanction.