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Role of renewable energy on industrial output in Canada

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  • Wadström, Christoffer
  • Wittberg, Emanuel
  • Uddin, Gazi Salah
  • Jayasekera, Ranadeva

Abstract

Several scholars have highlighted the idea that energy consumption in general and consumption of renewable energy (RE) in particular may be a potential driver of economic growth. In this paper, we examine the relationship between RE production and economic activity in Canada between May 1966 and December 2015. By applying quantile causality (Troster, 2018), we adopt a nonlinear approach considering all quantiles of the distribution and analysing monthly data consisting of RE production and the Canadian Industrial Production Index (IPI). We find evidence of a nonlinear relationship in Canada, an important result that widely-used linear models fail to capture. Our main findings imply a unidirectional relationship going from the IPI to RE production, which supports the Conservation hypothesis. The directionality between RE and economic growth is sensitive to the market conditions in Canada.

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  • Wadström, Christoffer & Wittberg, Emanuel & Uddin, Gazi Salah & Jayasekera, Ranadeva, 2019. "Role of renewable energy on industrial output in Canada," Energy Economics, Elsevier, vol. 81(C), pages 626-638.
    • Handle: RePEc:eee:eneeco:v:81:y:2019:i:c:p:626-638
    DOI: 10.1016/j.eneco.2019.04.028
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    More about this item

    Keywords

    Renewable energy; Economic growth; Nonlinear; Granger causality; Canada;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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