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Revisiting causal relationship between renewable energy and economic growth in OECD countries: Evidence from a novel JKS's Granger non-causality test

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  • Raifu, Isiaka Akande
  • Obaniyi, Fidelis Ademola
  • Nnamani, Great
  • Salihu, Abdulkhalid Anda

Abstract

Relying on the theoretical neoclassical growth model and employing a novel JKS Granger non-causality method, this study re-examined the causal relationship between renewable energy (RE) and economic growth (EG) using panel data from 35 OECD countries spanning 1990–2020. We investigated both bivariate and multivariate causalities. Our findings revealed a bidirectional causal relationship between RE and EG, implying that RE not only predicts EG but is also influenced by EG when labour force (LF) and capital (CA) are incorporated. When bivariate results are compared to multivariate ones, it is evident that the multivariate causality results demonstrate strong causality. Our findings also revealed that at low levels of EG and RE, RE, LF, and CA collectively predict EG. EG, LF, and CA also predict RE. However, at high levels of EG and RE, baseline analysis demonstrated unidirectional causality between RE, LF, and CA, with robustness analysis indicating a bidirectional causative link. So, our results showed that the relationship between RE and EG is dynamic and depends on certain factors. Based on our findings, we recommend that policymakers prioritize RE integration into the production process, linking energy policies to growth and development.

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  • Raifu, Isiaka Akande & Obaniyi, Fidelis Ademola & Nnamani, Great & Salihu, Abdulkhalid Anda, 2025. "Revisiting causal relationship between renewable energy and economic growth in OECD countries: Evidence from a novel JKS's Granger non-causality test," Renewable Energy, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:renene:v:244:y:2025:i:c:s0960148125002216
    DOI: 10.1016/j.renene.2025.122559
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    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • D2 - Microeconomics - - Production and Organizations

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