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Relationship between the share of renewable electricity consumption, economic complexity, financial development, and oil prices: A two-step club convergence and PVAR model approach

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  • Kazemzadeh, Emad
  • Fuinhas, José Alberto
  • Koengkan, Matheus
  • Shadmehri, Mohammad Taher Ahmadi

Abstract

The share of renewable energy consumption in total electricity consumption is analysed for a sample of forty-nine countries worldwide from 1985 to 2017. The analysis follows a two-step approach. First, the club convergence model was used to find the convergent countries. Second, a panel vector autoregression (PVAR) model estimation was used to analyse the convergent countries. Club convergence analysis confirms that forty-two countries are convergent in renewable energy consumption in total electricity consumption. The subgroup convergence tests confirm the existence of seven subgroups and one non-convergent group. Of these eight groups, the first seven are convergent among their group members, but the eighth group (Norway, Switzerland, Trinidad and Tobago) is non-convergent. The PVAR revealed a dense Granger causal relationship among the variables share of renewable electricity consumption, fossil consumption, GDP, trade openness, economic complexity, financial development, and oil prices. In their interventions, policymakers should be aware that the share of renewable energy consumption in total electricity consumption is very interdependent.

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  • Kazemzadeh, Emad & Fuinhas, José Alberto & Koengkan, Matheus & Shadmehri, Mohammad Taher Ahmadi, 2023. "Relationship between the share of renewable electricity consumption, economic complexity, financial development, and oil prices: A two-step club convergence and PVAR model approach," International Economics, Elsevier, vol. 173(C), pages 260-275.
  • Handle: RePEc:eee:inteco:v:173:y:2023:i:c:p:260-275
    DOI: 10.1016/j.inteco.2022.12.001
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    Cited by:

    1. Ishaya Jonah Tegina Tambari & Pierre Failler & Shabbar Jaffry, 2023. "The Differential Effects of Oil Prices on the Development of Renewable Energy in Oil-Importing and Oil-Exporting Countries in Africa," Energies, MDPI, vol. 16(9), pages 1-20, April.
    2. Marra, Alessandro & Colantonio, Emiliano, 2023. "On public policies in the energy transition: Evidence on the role of socio-technical regimes for renewable technologies," Energy Economics, Elsevier, vol. 128(C).
    3. Abir Khribich & Rami H. Kacem & Damien Bazin, 2024. "The Determinants of Renewable Energy Consumption: Which Factors are Most Important?," GREDEG Working Papers 2024-08, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    4. Feng Dong & Guoqing Li & Yajie Liu & Qing Xu & Caixia Li, 2023. "Spatial-Temporal Evolution and Cross-Industry Synergy of Carbon Emissions: Evidence from Key Industries in the City in Jiangsu Province, China," Sustainability, MDPI, vol. 15(5), pages 1-27, February.
    5. Payne, James E. & Truong, Huong Hoang Diep & Chu, Lan Khanh & Doğan, Buhari & Ghosh, Sudeshna, 2023. "The effect of economic complexity and energy security on measures of energy efficiency: Evidence from panel quantile analysis," Energy Policy, Elsevier, vol. 177(C).

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    More about this item

    Keywords

    Club convergence; Economic complexity; Financial development; Macroeconomics; Renewable electricity; Oil price;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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