Abstract
This study explores the economic growth – energy consumption nexus for two samples of MENA Net Oil Exporting Countries (NOECs) during the period 1980–2012. Using panel cointegration approach, we found strong evidence for the existence of a long-run relationship between real GDP, renewable and non-renewable energy consumption, real gross fixed capital formation, and the labor force. Moreover, empirical results from the estimation of the panel error correction model indicate evidence of a unidirectional causality running from economic growth to renewable energy consumption in the short-run. In the long-run, the results show evidence of a bidirectional causality for the entire group of MENA NOECs. For the 5 selected MENA NOECs sample, we found strong evidence for bidirectional causality between renewable energy and economic growth. Additionally, our results confirm bidirectional causality between renewable and non-renewable energy consumption with negative and significant coefficient in the short-run indicating substitutability between these two types of energy. Finally, the paper discusses the economic implications of the results and proposes certain policies recommendations.
•We assess the impact of renewable energy on economic growth for the MENA NOECs.•Two MENA NOECs samples are considered depending on the share of renewable energy.•Results show strong evidence for long run causality for the two samples.•Evidence for short run causality depends on the MENA NOECs sample considered.•We found evidence for substitutability between both types of energy.