Abstract:

The damage caused by global climate change has led economies to renewable energy sources instead of solid fossil wastes. While the renewable energy investments made by the developed countries were high at the beginning, the investments made by the developing countries have increased significantly in recent years. Renewable energy is vital because of its role in reducing global climate change. Purpose: The purpose of this study is to investigate the existence of a long-term relationship between renewable energy consumption and economic growth in the G-7 countries during the period of 1990 – 2017. Method: Analyse focused on the 1990 – 2017 period and used new PANIC tests, one of the second-generation unit root tests developed by Bai & Ng (2010) due to cross-section dependency. The long-term relationship is analysed with Durbin-Hausman test, which is developed by Westerlund (2008). Findings: The analysis result showed that no long-term relationship between renewable energy consumption and economic growth is found among G7 countries. Originality: The absence of any long-term relationship between renewable energy consumption and economic growth in G-7 countries indicates that renewable energy does not play a decisive role on economic growth in these economies. Because G-7 economies are not dependent on energy like emerging market economies in realizing their growth. It can be stated that revealing this relationship specific to the G-7 countries contributes to the literature

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