Investigation of the Relationship of Renewable Energy Consumption and Economic Growth in E7 Countries

Abstract

It has become inevitable today to support the concept of growth with the development in energy. Energy has become a most necessary phenomenon even to meet the basic needs of people. When considering food, shelter and travel, the need for heating the house, cooking the food and providing transportation highlights the place of energy in human life. For this purpose, in this study, the relationship between renewable energy consumption and economic growth within the scope of E7 countries was examined. In order to determine the causality relationship between the variables, Emirmahmutoğlu and Köse causality test, which takes heterogeneity into account, was applied. As a result of the causality test, it was found that there is a bidirectional causality relationship at the 1% significance level between renewable energy consumption and economic growth throughout the panel. When the causality relationship is analyzed on a country basis, it is seen that for Turkey at the 10% significance level from renewable energy consumption to economic growth, 1% significance level from economic growth to renewable energy consumption for Brazil, 1% significance level from economic growth to renewable energy consumption for China, and from economic growth to renewable energy consumption for Russia. It was found that there is a one-way causality relationship towards energy consumption at the 5% significance level.