Impact of renewable energy on economic growth? Novel evidence from developing countries through MMQR estimations

This study aims to examine the association between economic growth and energy consumption (renewable and nonrenewable). The data was collected from 80 developing countries comprising countries from all income over the 1990 to 2020 period. On methodological aspects, this study identifies the diverse impact of variables at different quantiles through novel methods of movement quantile regression (MMQR) approach and long-run coefficient estimations through fully modified ordinary least squares, fixed effects ordinary least squares, and dynamic ordinary least squares. According to the primary findings, the growth hypothesis exists in developing countries as both nonrenewable energy and renewable energy impact economic growth positively in MMQR estimation (for renewable energy at all quintiles and nonrenewable energy at lower quantiles), whereas the feedback hypothesis exists in (Dumitrescu and Hurlin Econ Model 29(4):1450-1460, 2012) Granger causality approach. The findings exposed that the economic renewable and non-renewable energy consumption has a positive impact on economic growth in developing countries. Based on the results, we recommend that developing countries prioritize investments in renewable energy for their production and expansion. Moreover, the provision of tax exemptions, subsidies, and feed-in tariffs are the right policy options towards the encouragement of the renewable energy sector and ultimately for the growth of the developing countries.