Economic growth, renewable and nonrenewable energy consumption nexus in India: Evidences from nonlinear ARDL approach and asymmetric causality analysis

Abstract

Purpose

The purpose of this paper is to examine the nexus among economic growth, nonrenewable energy consumption and renewable energy consumption in India over the period 1971-2017.

Design/methodology/approach

This study uses nonlinear autoregressive distributed lags model and asymmetric causality test to explore nonlinearities in the dynamic interaction among the variables.

Findings

The findings indicate that the impact of nonrenewable energy consumption and renewable energy consumption on the economic growth is asymmetric in both long run and short run. In long run, a positive shock in nonrenewable energy consumption and renewable energy consumption exerts a positive impact on growth. However, the negative shocks in nonrenewable energy consumption produce larger negative effects on the growth. The results of nonlinear causality test indicate a unidirectional causality from nonrenewable energy consumption and renewable energy consumption to economic growth and thus support “growth hypothesis” in context of India.

Practical implications

The findings imply that policy measures to discourage nonrenewable energy consumption may produce deflationary effects on economic growth in India. Further, the findings demonstrate the potential role of renewable energy consumption in promoting economic growth.

Originality/value

To the best of the authors’ knowledge, this study is the first attempt to explore nonlinearities in the relationship between economic growth and the components of energy consumption in terms of renewable and nonrenewable energy consumption.

Citation

Shastri, S., Mohapatra, G. and Giri, A.K. (2020), "Economic growth, renewable and nonrenewable energy consumption nexus in India: Evidences from nonlinear ARDL approach and asymmetric causality analysis", International Journal of Energy Sector Management, Vol. 14 No. 4, pp. 777-792. https://doi.org/10.1108/IJESM-06-2019-0016