TY - JOUR
T1 - Renewable energy and economic growth: A Markov-switching approach
AU - Chen, Yiyang
AU - Mamon, Rogemar
AU - Spagnolo, Fabio
AU - Spagnolo, Nicola
PY - 2022
Y1 - 2022
N2 - This paper examines the dynamic causal relationship between renewable energy prices and economic growth in the cases of Norway, New Zealand, and two Canadian provinces. A Markov-switching vector autoregression (MS-VAR) model is used with model parameters being governed by a hidden Markov chain, allowing the causal relationship to vary amongst different states of the economy. A unidirectional causal link, running from economic growth to renewable energy is found in the case of New Zealand, Alberta, and Ontario. The causality emerges in the cases of New Zealand and Ontario, during periods of high economic growth, whilst it materializes in the cases of Alberta during periods of low economic growth. Our empirical results document the existence of a time-dependent causal relationship between renewable-energy prices and economic growth.
AB - This paper examines the dynamic causal relationship between renewable energy prices and economic growth in the cases of Norway, New Zealand, and two Canadian provinces. A Markov-switching vector autoregression (MS-VAR) model is used with model parameters being governed by a hidden Markov chain, allowing the causal relationship to vary amongst different states of the economy. A unidirectional causal link, running from economic growth to renewable energy is found in the case of New Zealand, Alberta, and Ontario. The causality emerges in the cases of New Zealand and Ontario, during periods of high economic growth, whilst it materializes in the cases of Alberta during periods of low economic growth. Our empirical results document the existence of a time-dependent causal relationship between renewable-energy prices and economic growth.
U2 - 10.1016/j.energy.2021.123089
DO - 10.1016/j.energy.2021.123089
M3 - Article
SN - 0360-5442
VL - 244
JO - Energy
JF - Energy
ER -