Assessing the Impact of Renewable Energy Consumption on Economic Growth - An Empirical Analysis in Nigeria


Authors : Prisca Ngozi Iwunze

Volume/Issue : Volume 9 - 2024, Issue 12 - December

Google Scholar : https://tinyurl.com/5dsx8v64

Scribd : https://tinyurl.com/yc47trp4

DOI : https://doi.org/10.5281/zenodo.14591298

Abstract : The article examines the relationship between economic growth and the use of renewable energy through an empirical analysis conducted in Nigeria between 1990 and 2020. Further research was done to determine the direction of causation, which leans towards independence, between Nigeria's economic progress and its use of renewable energy. The paper offers a bivariate linear regression model as an empirical model to illustrate how using renewable energy affects economic growth. Descriptive analysis showed the data to be normally distributed and the econometric technique which includes unit root test, linear bivariate regression model, cusum test and pairwise Granger causality test was used to establish the efficacy of the study. Econometric evidence obtained from the survey showed that renewable energy consumption has a significant positive impact on economic growth. R square gives 0.99 variations in gross domestic product that is explained by renewable energy consumption and the probability value of 0.0001 indicates the overall significance of all independent variables in the model. Cusum test of stability evidenced the stability of the model and Durbin Watson statistic of 2.3 indicates the absence of autocorrelation in the model. The government must take a purposeful policy position to increase its investment in renewable energy to lower the economy's carbon footprint, as there is no statistically significant correlation between the use of renewable energy and economic growth.

Keywords : Causality Test, Cusum Test, Economic Growth, Ktoe, Renewable Energy, Unit Root Test.

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    http://www.wiloludiournal.com
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The article examines the relationship between economic growth and the use of renewable energy through an empirical analysis conducted in Nigeria between 1990 and 2020. Further research was done to determine the direction of causation, which leans towards independence, between Nigeria's economic progress and its use of renewable energy. The paper offers a bivariate linear regression model as an empirical model to illustrate how using renewable energy affects economic growth. Descriptive analysis showed the data to be normally distributed and the econometric technique which includes unit root test, linear bivariate regression model, cusum test and pairwise Granger causality test was used to establish the efficacy of the study. Econometric evidence obtained from the survey showed that renewable energy consumption has a significant positive impact on economic growth. R square gives 0.99 variations in gross domestic product that is explained by renewable energy consumption and the probability value of 0.0001 indicates the overall significance of all independent variables in the model. Cusum test of stability evidenced the stability of the model and Durbin Watson statistic of 2.3 indicates the absence of autocorrelation in the model. The government must take a purposeful policy position to increase its investment in renewable energy to lower the economy's carbon footprint, as there is no statistically significant correlation between the use of renewable energy and economic growth.

Keywords : Causality Test, Cusum Test, Economic Growth, Ktoe, Renewable Energy, Unit Root Test.

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