The Relationship Among Renewable Energy, Economic Growth, Labor and Capital Formation in Italy

Rivista di Studi sulla Sostenibilità, 1, 35-48, DOI: 10.3280/RISS2018-001005, ISSN: 2239-1959

Posted: 11 Dec 2018

See all articles by Cosimo Magazzino

Cosimo Magazzino

University of Rome III; Royal Economic Society; Italian Economic Association

Date Written: 2018

Abstract

This study investigates the nexus between renewable energy consumption and economic growth in Italy in the 1970-2007 years. The unit root tests results point out that our four variables are integrated of order one. Cointegration analysis reach contradictory results. However, the long-run estimations reveal that, if renewable energy consumption increases by 1%, real GDP decreases by 0.23%. The Toda and Yamamoto approach shows that exists a unidirectional causal flow, running from renewable energy consumption to aggregate income, in line with the “growth hypothesis”. Moreover, these results are confirmed by Granger causality tests. While forecasts applications set out that VAR forecasts represent an improvement on simpler forecasts in more than half the comparisons, for each variable. In fact, VAR gives more accurate forecasts, over-performing the mean, RW, and AR methods.

Keywords: Renewable Energy Consumption, GDP, Time Series, Italy

JEL Classification: B22, C32, N54, Q43

Suggested Citation

Magazzino, Cosimo, The Relationship Among Renewable Energy, Economic Growth, Labor and Capital Formation in Italy (2018). Rivista di Studi sulla Sostenibilità, 1, 35-48, DOI: 10.3280/RISS2018-001005, ISSN: 2239-1959, Available at SSRN: https://ssrn.com/abstract=3272172

Cosimo Magazzino (Contact Author)

University of Rome III ( email )

Via Ostiense 139
Rome, RM 00154
Italy

HOME PAGE: http://scienzepolitiche.uniroma3.it/cmagazzino/

Royal Economic Society ( email )

London
United Kingdom

Italian Economic Association ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy

HOME PAGE: http://www.siecon.org/online/en/

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