Empirical exploration of remittances and renewable energy consumption in Bangladesh

Abstract

In recent years, a surge of remittances to Bangladesh has enabled rural households to adopt modern renewable energy sources. However, researchers have yet to examine any statistical association between remittances and renewable energy. In this study, we determined the causal relationships between per capita remittance inflows and renewable energy consumption in Bangladesh using annual data for the period 1980–2017. This is the first such study. This determination was made while controlling for changes in GDP, and employing causality and cointegration testing. We arrived at three key results. First, a unidirectional causality running from the level of remittances per capita to a level of renewable energy consumption was determined. Second, we observed a unique cointegrating relationship between the variables. Third, a short-run bidirectional causality between remittances per capita and renewable energy consumption was clarified. Important policy implications indicate that the government should create incentives for remittance-recipient households to invest remittance funds in modern renewable technologies such as solar home energy systems.