Abstract
AbstractThis empirical study examines the causal links among renewable energy consumption (REC) and non‐renewable energy consumption (NREC) and economic growth in Germany, the UK and France between 1980 and 2019. To this purpose, we use two different approaches: Toda and Yamamoto (Journal of Econometrics, 66, 1995, 225) time causality test and Lemmens et al. (International Journal of Forecasting, 24, 2008, 414) frequency causality test. For UK and France, the results show no significant causality between Gross Domestic Product (GDP) and REC, which supports the neutrality hypothesis. Regarding NREC, similar findings are obtained. However, for Germany, the time approach indicates bi‐directional causality between REC and GDP, while the frequency approach shows uni‐directional causality from REC to GDP in the long‐run. Therefore, there is a consensus on the growth hypothesis in Germany. Furthermore, the frequency analysis displays also one way causal nexus running from Germany’s GDP to NREC in long horizons. The policymakers in UK and France should take into account that renewables and energy conservation policies are neutral in respect to economic growth. As for Germany, measures of reducing NREC would not significantly damage GDP, and renewable energies promotion plan would be beneficial for economic growth.
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