Relationship between Renewable Energy Consumption and Economic Growth in Five South Asian Countries: An Empirical Analysis

Increased amount of fossil energy consumption in developing or
emerging countries has created major concerns about global warming
where renewable energy could be a good option which can assist to
continue stable economic growth as well as can prevent environmental
degradation. To the best of our knowledge, no studies have been
conducted to investigate the relationship between renewable energy
consumption and economic growth in five South Asian neighboring
countries and so the aim of this paper is to investigate the relationship
between the two concerned variables with the help of panel data ranging
from 1981-2015. Johansen-Fisher cointegration test results show that in
the long run variables are cointegrated and Dumitrescu-Hurlin panel
causality test results show a bidirectional causality between renewable
energy consumption and economic growth in the long runsupporting
feedback hypothesis. According to Vector Error Correction Model, no
causality has been found in short run and long run estimation results
show coefficient of renewable energy consumption is inelastic but
positive. As all of the selected countries are walking on the path of
development in terms of socially and economically, policies should be
taken in favor of promoting renewable energy consumption as well as
development of renewable energy sector.

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