The asymmetric nexus of renewable energy consumption and economic growth: New evidence from Rwanda

Existing studies on the impact of renewable energy consumption on economic growth, which was conducted in either middle/high-income countries or mixed sampled countries, produce the effect, but unfeasible in low-income countries. This study examines the asymmetric nexus of renewable energy consumption and economic growth, and the impact of agriculture and capital on economic growth by employing a non-linear autoregressive distributed lagged model (NARDL) and causality test from 1990 to 2015 in Rwanda. The results show evidence that renewable energy consumption affects economic growth. Asymmetric causality relationship, which is running from positive shocks renewable energy consumption to economic growth is noted. Furthermore, the unidirectional causality effect flowing from both agriculture and capital to economic growth for both positive and negative shocks is obtained. Therefore, the Government of Rwanda needs to realize positive economic growth from its investment in renewable energy consumption and agriculture as prior sectors of development. (c) 2021 Elsevier Ltd. All rights reserved.

Automated summary

The study found that renewable energy consumption has an impact on economic growth, and observed an asymmetric causality relationship from positive shocks of renewable energy consumption to economic growth, as well as a unidirectional causality effect from agriculture and capital to economic growth.