On the renewable, non-renewable energy consumption and growth nexus in emerging economies: Empirical evidence from Turkey
(2019) EKHS22 20191Department of Economic History
- Abstract
- Since carbon-emitting energy sources are the largest contributor to global warming and climate change, this present paper attempts to contribute to the current debate in energy-growth nexus in the literature. Focusing on the case of Turkey, it seeks to find out whether or not switching to a low-carbon path will be beneficial for this fastest-growing OECD economy by investigating the relationship between energy sources (both renewable and non-renewable) and economic growth over the period of 1990-2015. Based on the annual data, it uses an energy-incorporated Cobb-Douglas production function to perform an ARDL bounds test to check for long-term cointegration and a VECM approach to find the direction of causal relationship in the short-run... (More)
- Since carbon-emitting energy sources are the largest contributor to global warming and climate change, this present paper attempts to contribute to the current debate in energy-growth nexus in the literature. Focusing on the case of Turkey, it seeks to find out whether or not switching to a low-carbon path will be beneficial for this fastest-growing OECD economy by investigating the relationship between energy sources (both renewable and non-renewable) and economic growth over the period of 1990-2015. Based on the annual data, it uses an energy-incorporated Cobb-Douglas production function to perform an ARDL bounds test to check for long-term cointegration and a VECM approach to find the direction of causal relationship in the short-run and long-run. Empirical analysis revealed four findings: (1) all variables are cointegrated in the long-run; (2) there is a bidirectional causality running from growth to renewable energy consumption in the long-run, but no meaningful relationship is found in the short-run; (3) economic growth also drives nonrenewable energy consumption both in the short-run and long-run; (4) despite the lack of relationship in the short-run, the long-run unidirectional causality shows that non-renewable energy consumption has a direct impact on the use of renewables. The outcome of the analysis indicates that energy is not a limiting factor to growth in Turkey; therefore, confirming the validity of conservation hypothesis. In the short-run, the main policy recommendation is to focus on energy conservation strategies either by curtailing the consumption or improving the efficiency without having any adverse impact on growth. In the long-run, energy diversification should be the ultimate goal. By integrating renewables into its energy mix, Turkey can decarbonize its economy, followed by the benefits including substantial debt-relief thanks to energy independence, increased energy security, and a drastic reduction in CO2 emissions. Thus, the promotion of renewables will be vital for addressing the social, economic, and environmental concerns in the future. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8995064
- author
- Eruydas, Tugce LU
- supervisor
- organization
- course
- EKHS22 20191
- year
- 2019
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- Renewable energy consumption, total energy use, fossil fuels, economic growth, cointegration, Granger causality, emerging economy, Turkey
- language
- English
- id
- 8995064
- date added to LUP
- 2020-05-07 11:42:10
- date last changed
- 2020-05-07 11:42:10
@misc{8995064,
abstract = {{Since carbon-emitting energy sources are the largest contributor to global warming and climate change, this present paper attempts to contribute to the current debate in energy-growth nexus in the literature. Focusing on the case of Turkey, it seeks to find out whether or not switching to a low-carbon path will be beneficial for this fastest-growing OECD economy by investigating the relationship between energy sources (both renewable and non-renewable) and economic growth over the period of 1990-2015. Based on the annual data, it uses an energy-incorporated Cobb-Douglas production function to perform an ARDL bounds test to check for long-term cointegration and a VECM approach to find the direction of causal relationship in the short-run and long-run. Empirical analysis revealed four findings: (1) all variables are cointegrated in the long-run; (2) there is a bidirectional causality running from growth to renewable energy consumption in the long-run, but no meaningful relationship is found in the short-run; (3) economic growth also drives nonrenewable energy consumption both in the short-run and long-run; (4) despite the lack of relationship in the short-run, the long-run unidirectional causality shows that non-renewable energy consumption has a direct impact on the use of renewables. The outcome of the analysis indicates that energy is not a limiting factor to growth in Turkey; therefore, confirming the validity of conservation hypothesis. In the short-run, the main policy recommendation is to focus on energy conservation strategies either by curtailing the consumption or improving the efficiency without having any adverse impact on growth. In the long-run, energy diversification should be the ultimate goal. By integrating renewables into its energy mix, Turkey can decarbonize its economy, followed by the benefits including substantial debt-relief thanks to energy independence, increased energy security, and a drastic reduction in CO2 emissions. Thus, the promotion of renewables will be vital for addressing the social, economic, and environmental concerns in the future.}},
author = {{Eruydas, Tugce}},
language = {{eng}},
note = {{Student Paper}},
title = {{On the renewable, non-renewable energy consumption and growth nexus in emerging economies: Empirical evidence from Turkey}},
year = {{2019}},
}