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Renewable and non-renewable energy consumption and economic growth: Evidence from MENA Net Oil Importing Countries

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  • Kahia, Montassar
  • Ben Aissa, Mohamed Safouane

Abstract

In this paper, we use panel cointegration techniques to explore the relationship between renewable and non-renewable energy consumption and economic growth in a sample of 11 MENA Net Oil Importing Countries covering the period 1980–2012. The Pedroni (1999, 2004), Kao(1999) as well as Westerlund(2007) panel cointegration tests indicate that there is a long-run equilibrium relationship between real GDP, renewable energy consumption, non-renewable energy consumption, real gross fixed capital formation, and the labor force with elasticities estimated positive and statistically significant in the long-run. Results from panel error correction model expose that there is confirmation of bidirectional causality between renewable energy consumption and economic growth, between non-renewable energy consumption and economic growth as well as between renewable and non-renewable energy consumption that is evidence of their substitutability and interdependence in both the short and long-run supporting the feedback hypothesis. We suggest that Governments should implement policies that promote the development of renewable energy sector in order to realize economies of scale such as tax credits for renewable energy production, installation rebate for renewable energy systems as well as the establishment of markets for renewable energy certificates.

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  • Kahia, Montassar & Ben Aissa, Mohamed Safouane, 2014. "Renewable and non-renewable energy consumption and economic growth: Evidence from MENA Net Oil Importing Countries," MPRA Paper 80780, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:80780
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    Keywords

    Renewable and non-renewable energy consumption; Growth; Panel cointegration; MENA Net Oil Importing Countries;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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