The dynamic effects of renewable energy on economic growth

Many countries rely heavily on energy sources to provide sustainable growth rate. Simultaneously, growth rates of these countries define applicability of variety of energy production. This paper examined association between renewable energy and growth rate with some other variables in the case of sixteen high income countries. Panel causality is applied to indicate short run and long run relationship among variables, bidirectional causality held in renewable energy and growth rate in the short term while unidirectional causality take place in the long term. Fully modified ordinary least square and dynamic least square support the idea that relationship between renewable energy and economic growth by statistical significance of panel result. Luxembourg is a country which has maximum contribution of the renewable energy to the gross national product according to the results of not only DOLS but also FMOLS.