On the sustainability of growth from energy consumption: Empirical evidence from a dynamic autoregressive distributed lag simulation

Abstract

Energy is among the key drivers of economic growth. As the attainment of sustainable development becomes the major goal of modern economies, energy resources must, however, be appraised not only based on their capacity to fuel growth but also on their ability to sustain the same. This paper adds to the growing research on the growth-energy nexus by incorporating the dynamics of sustainability alongside the traditional growth factors of capital and labor using France’s yearly series from 1980 to 2019. The newly developed dynamic autoregressive distributed lag (ARDL) simulation was adopted to explore the nature of the long-run dynamics among the variables. The empirical findings support the notion that energy consumption significantly impacts gross domestic product (GDP) positively whereas, in the case of the adjusted net savings (ANS) which is an index of sustainable development, its long-run impact is positive but insignificant. The results also show that the counterfactual effects of shocks to energy usage are smaller on economic growth than sustainable development. France is recommended to promote green growth by boosting the contribution of renewables in the energy mix to fully optimize and sustain growth from energy resources.