Analyzing the asymmetric effect of renewable energy on economic growth in a transitional economy

Exploring the reciprocal relationship between energy consumption and economic growth is essential for understanding renewable energy dynamics. Based on the nonlinear autoregressive distributed lag (NARDL) approach, this study analyzes the influence mechanism and asymmetric effect of renewable energy consumption and other explanatory variables on the economic growth in Tunisia from 1971 to 2023. The results confirm that the relationship between renewable energy consumption and long- and short-term economic growth is asymmetric. The analysis indicates that renewable energy, oil and natural gas consumption have a short-term negative cumulative effect on economic growth, while investment, capital and lags in economic growth have a short-term positive cumulative effect. This result can be explained by the low levels of renewable energy production in Tunisia (eg, renewables accounted for only around 6% of the 2023 overall energy capacity) and by the homogeneity of renewable energy generation sources. The energy transition process is underway in Tunisia, albeit slowly. Political solutions such as energy transition strategies are insufficient to explain the influence mechanism. The issues raised by this paper are multidimensional, including the need for institutional, financial and governmental reforms.