Analysis of the long-run relationship between public capital, economic growth, and (non-)renewable energy consumption: a pooled mean group approach

Abstract

This study examines the relationships among public capital, economic growth, and (non-)renewable energy consumption in 48 countries from 1981 to 2019. Our twofold findings reveal that a 1% increase in public capital correlates with 0.34% income growth and changes in renewable and fossil-based energy consumption by 0.46% and 0.23%, respectively. A 1% rise in renewable energy use leads to a 0.39% decrease in fossil-based energy. Granger causality tests show bidirectional causality among output, public capital, private capital, and employment. Importantly, income influences both forms of energy consumption, but the reverse is not statistically significant. These findings provide policy insights for hastening the transition to a low-carbon economy, thereby supporting the achievement of SDGs 7, 8, 9, and 13.