The interactions between renewable energy consumption and economic growth in the Mercosur countries

Abstract

ABSTRACTThe relationship between the consumption of renewable energy, economic growth, and globalisation is investigated. Data for five Mercosur countries in the period between 1980 and 2014 and the PVAR methodology are used. The estimated model and the results of a Granger causality Wald test indicate that a bidirectional relationship exists between the consumption of energy (from both renewable and fossil sources) and economic growth, and suggest that the assessed countries’ economic growth is dependent on fossil fuels. There is also evidence of substitutability in the consumption of energy from renewable and fossil sources in periods of drought, and that the process of globalisation has a positive indirect influence on the Mercosur countries’ consumption of renewable energy.