The relationship among renewable energy, economic growth, labor and capital formation in Italy

Author/s Cosimo Magazzino, Gordon L. Brady
Publishing Year 2018 Issue 2018/1
Language English Pages 14 P. 35-48 File size 281 KB
DOI 10.3280/RISS2018-001005
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This study investigates the nexus between renewable energy consumption and economic growth in Italy in the 1970-2007 years. The unit root tests results point out that our four variables are integrated of order one. Cointegration analysis reach contradictory results. However, the long-run estimations reveal that, if renewable energy consumption increases by 1%, real GDP decreases by 0.23%. The Toda and Yamamoto approach shows that exists a unidirectional causal flow, running from renewable energy consumption to aggregate income, in line with the "growth hypothesis". Moreover, these results are confirmed by Granger causality tests. While forecasts applications set out that VAR forecasts represent an improvement on simpler forecasts in more than half the comparisons, for each variable. In fact, VAR gives more accurate forecasts, over-performing the mean, RW, and AR methods.

Keywords: Renewable energy consumption, GDP; time series; Italy.

Jel codes: B22; C32; N54; Q43.

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Cosimo Magazzino, Gordon L. Brady, The relationship among renewable energy, economic growth, labor and capital formation in Italy in "RIVISTA DI STUDI SULLA SOSTENIBILITA'" 1/2018, pp 35-48, DOI: 10.3280/RISS2018-001005