Economic growth and non-renewable and renewable energy consumption nexus in Morocco: causality analysis in VAR model Online publication date: Fri, 08-Apr-2022
by Mounir El-Karimi
International Journal of Sustainable Economy (IJSE), Vol. 14, No. 2, 2022
Abstract: Morocco is the fourth-largest electricity consumer in Africa and the fifth in terms of gross domestic product (GDP). This paper examines the causal relationship between renewable and non-renewable energy consumption and GDP in Morocco in the framework of extended Cobb-Douglas production function. To this purpose, we apply Toda and Yamamoto (1995) causality test in VAR model using annual data from 1980 to 2019. First, the results display that there is no significant causality nexus between renewable energy consumption and economic growth, and then the neutrality hypothesis is supported. This finding could be partly explained by the fact that there is likely an unreached threshold beyond which renewable energy consumption will begin to promote economic growth. Second, unidirectional causality from economic growth to non-renewable energy consumption is revealed. Thus, the later seems to be promoted by the country's economic development. Furthermore, capital and labour are found to significantly impact economic growth.
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