Renewable Energy’s Effect on GDP Growth: Results from a Heterogeneous Panel Data Analysis

Abstract

Energy is a vital and crucial aspect for the economic advancement of countries and enhancing their living standards. In light of the rapid increase in energy consumption resulting from industrialization activities and technological developments, the limited availability of conventional energy resources has prompted nations to alter their energy production policies and resort to alternative energy sources. Our research, which is based on an extensive literature review, utilizes a heterogeneous panel data model to analyze the data of this study, which covers the period from 1970 to 2019, using real GDP (in million 2017 USD) according to chained PPP, capital stock (in million 2017 USD) according to current PPP, human capital index based on years of schooling and returns to education, and total renewable energy consumption in terawatt-hours (TWh) for each of the 22 European countries. We then calculated the difference between the dependent variable and the classifier-lasso model as suggested by Su, Shi, and Phillips (2016). Our findings indicate a statistically significant econometric relationship between all variables