Does Renewable Energy Affect the Economic Growth of Algeria

Salah Eddine SARI HASSOUN
Mohammed MEKIDICHE

Keywords

renewable energy, economic growth, Algeria, ARDL model, Granger causality

Abstract

The energy plays a major role in the world economic system, as they support the improvement of the well-being of the population and the development of economic growth. In the light of this statement, Algeria is now working on new incentives that can hasten to introduction of renewable energy in its energy system and then satisfying its future energy demand and the energy shortage. In this study, we investigated with the autoregressive distributed lags (ARDL) model and Granger causality the relationship between renewable energy consumption and economic growth in Algeria during the period of 1995-2016. We employed the two main variables, renewable energy consumption, and the gross domestic product (GDP), and the four control variables, fossil energy consumption, gross fixed capital formation, labour force, and international trade. We found that the renewable energy has a positive influence on economic growth in Algeria, but we showed with Granger causality that there’s no evidence of causality between renewable energy consumption and (GDP), approving the neutrality hypothesis.