Measuring the effect of trade liberalisation on the consumption of nonrenewable energy sources in Latin America and the Caribbean Countries

Abstract

This article investigates the impact of trade openness on the consumption of fossil fuels for a panel of fourteen LAC countries over the period from 1990 to 2014. To this end, a PARDL model in unrestricted error-correction form is estimated. The results of the regression indicate that the impact of economic growth and the elasticity of trade openness are positive and statistically significant at 1%. Both contribute to increase the consumption of fossil fuels in the LAC countries. However, the impact and elasticity of the consumption of renewable energy are negative and statistically significant at 1% and 5% levels, thus contributing to decrease the consumption of fossil fuels.