Investigating the Nonlinear Relationship between Social Development and Renewable Energy Consumption: A Nonlinear Autoregressive Distributed Lag (ARDL) Based Method

The purpose of this paper is to explore how social development affects renewable energy consumption. The proposed methodology derives from the Social Development Index (SDI) which is calculated by aggregating several indicators associated with social well-being. In addition, the added value of this paper, compared to the literature, is to consider a possible non-linear relationship between social development and renewable energy consumption, based on the nonlinear Autoregressive Distributed Lag (ARDL) approach. Using Tunisian data for empirical validation, the proposed procedure provides original results. Indeed, it provides more details about the impact of increasing versus decreasing portions of social development on renewable energy consumption in the short and long run. Thus, it is found that renewable energy consumption is particularly sensitive to the decrease in social development. Indeed, according to our estimation and for the Tunisian case, a 1% decrease in social development leads to a decrease in renewable energy consumption by 3.235%. The proposed procedure merit to be validated for different cases and contexts.