Total, renewable and non-renewable energy consumption and economic growth: Revisiting the issue with an asymmetric point of view

Abstract

Previous literature assumes a symmetric linkage between energy consumption and economic growth. However, a variation on energy consumption does not necessarily have the same impact on economic growth, or vice-versa. Considering this possible asymmetry between the variables, this study aims to examine the long- and short-run relationships between total, renewable and non-renewable energy consumption and economic growth in G7 countries over the period 1980–2014 by using the nonlinear autoregressive distributed lag (NARDL) and asymmetric causality approaches. Findings indicate that production function matters in determining the cointegration among the variables. The results of asymmetric and symmetric relationships and causality analyses, on the other hand, are found to be very volatile across production functions and energy proxies. When the energy consumption is measured by total energy use, however, the results provide strong support of an asymmetric relationship between energy consumption and economic growth in the long-run.