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Renewable energy: An efficient mechanism to improve GDP

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  • Chien, Taichen
  • Hu, Jin-Li

Abstract

This article analyzes the effects of renewable energy on GDP for 116 economies in 2003 through Structural Equation Modeling (SEM) approach. In order to decipher the mechanism of how the use of renewables improves macroeconomic efficiency, we decompose GDP by the "expenditure approach". Although previous theory predicts positive effects of renewables on capital formation and trade balance, the SEM results show that renewables have a significant positive influence on capital formation only. The result that renewables do not have a significant impact on trade balance implies that renewables do not have an import substitution effect. Thus, we confirm the positive relationship between renewable energy and GDP through the path of increasing capital formation, but not for the path of increasing trade balance.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 36 (2008)
Issue (Month): 8 (August)
Pages: 3035-3042

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Handle: RePEc:eee:enepol:v:36:y:2008:i:8:p:3035-3042

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Web page: http://www.elsevier.com/locate/enpol

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References

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  1. Lund, P.D., 2007. "Effectiveness of policy measures in transforming the energy system," Energy Policy, Elsevier, vol. 35(1), pages 627-639, January.
  2. Green, Chris & Baksi, Soham & Dilmaghani, Maryam, 2007. "Challenges to a climate stabilizing energy future," Energy Policy, Elsevier, vol. 35(1), pages 616-626, January.
  3. Söderholm, Patrik & Ek, Kristina & Pettersson, Maria, 2007. "Wind power development in Sweden: Global policies and local obstacles," Renewable and Sustainable Energy Reviews, Elsevier, vol. 11(3), pages 365-400, April.
  4. Anderson, Dennis & Leach, Matthew, 2004. "Harvesting and redistributing renewable energy: on the role of gas and electricity grids to overcome intermittency through the generation and storage of hydrogen," Energy Policy, Elsevier, vol. 32(14), pages 1603-1614, September.
  5. Toshihiko Masui, Tatsuya Hanaoka, Saeko Hikita, and Mikiko Kainuma, 2006. "Assessment of CO2 Reductions and Economic Impacts Considering Energy-Saving Investments," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 175-190.
  6. Chien, Taichen & Hu, Jin-Li, 2007. "Renewable energy and macroeconomic efficiency of OECD and non-OECD economies," Energy Policy, Elsevier, vol. 35(7), pages 3606-3615, July.
  7. Wamukonya, Njeri, 2007. "Solar home system electrification as a viable technology option for Africa's development," Energy Policy, Elsevier, vol. 35(1), pages 6-14, January.
  8. Gan, Lin & Eskeland, Gunnar S. & Kolshus, Hans H., 2007. "Green electricity market development: Lessons from Europe and the US," Energy Policy, Elsevier, vol. 35(1), pages 144-155, January.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Renewable energy and import-substituting industrialization
    by John Whitehead in Environmental Economics on 2009-03-10 12:16:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Aviral Kumar Tiwari, 2011. "A structural VAR analysis of renewable energy consumption, real GDP and CO2 emissions: Evidence from India," Economics Bulletin, AccessEcon, vol. 31(2), pages 1793-1806.
  2. Chang, Ting-Huan & Huang, Chien-Ming & Lee, Ming-Chih, 2009. "Threshold effect of the economic growth rate on the renewable energy development from a change in energy price: Evidence from OECD countries," Energy Policy, Elsevier, vol. 37(12), pages 5796-5802, December.
  3. Kaldellis, J.K., 2011. "Critical evaluation of financial supporting schemes for wind-based projects: Case study Greece," Energy Policy, Elsevier, vol. 39(5), pages 2490-2500, May.
  4. Muhammad, Shahbaz Shabbir & Muhammad, Zeshan & Muhammad, Shahbaz, 2011. "Renewable and nonrenewable energy consumption, real GDP and CO2 emissions nexus: a structural VAR approach in Pakistan," MPRA Paper 34859, University Library of Munich, Germany, revised 18 Nov 2011.
  5. Marques, António C. & Fuinhas, José A. & Pires Manso, J.R., 2010. "Motivations driving renewable energy in European countries: A panel data approach," Energy Policy, Elsevier, vol. 38(11), pages 6877-6885, November.
  6. Sadorsky, Perry, 2009. "Renewable energy consumption and income in emerging economies," Energy Policy, Elsevier, vol. 37(10), pages 4021-4028, October.

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