The impact of total and renewable energy consumption on economic growth in lower and middle- and upper-middle-income groups: Evidence from CS-DL and CCEMG analysis

Abstract

Among the literature that examined the total and renewable energy-growth nexus, few of them were conducted in low and middle-income countries, however, the total-renewable energy-growth nexus in the lower and middle-income countries at the regional and global levels has not discussed. In this respect, this study examines the impact of total and renewable energy consumption on growth at the global and regional levels across the low-, lower and middle-, and upper-middle-income groups for a sample of 75 countries from 1980 to 2016. The cross-sectional augmented Autoregressive distributed lagged (CS-DL) and common correlated effect means group (CCEMG) have been employed. The findings reveal that total energy is significantly and positively affects economic growth in three income groups; especially this effect is increasing concerning the level of income group, and renewable energy consumption positively affects economic growth at the global level. At the regional levels, the effect of total and renewable energy consumption on growth is mixed across the income groups. Furthermore, negative and neutral effects of renewable energy on growth are highly prevalent than those from total energy at the regional levels. Therefore, policymakers need to reflect on cause-led negative effects and set relative policies, which could attract investors in renewable energy projects so that renewable energy will positively affect economic growth in all regions across income groups.