Nonparametric analysis of the relationship between income inequality and energy consumption in African countries

Abstract

AbstractEnergy usage and disparities in income have emerged as the major threats that hinder the achievement of sustainable development goals in Africa. This study aims to assess the time‐varying impact of income inequality on both renewable and nonrenewable energy consumption, utilizing both parametric and nonparametric models across a panel of 18 African countries from 1990 to 2015. We find that, according to the parametric model, income inequality does not affect energy consumption. However, the nonparametric estimates point the presence of both positive and negative relationship between the two variables at different time period. The time varying impacts reveal that unfair income distribution affects renewable energy consumption via the dominance of some channels at specific times. Accordingly, the findings of this study emphasize that policymakers in African countries need to give particular heed to the role played by the income inequality in designing cleaner and greener energy transition policies.