Welfare gains from international trade and renewable energy demand: Evidence from the OECD countries

This paper uses a new measure of international trade, i.e. the international trade potential index, to measure the welfare gains from trade across countries. The measure is based on the import shares of countries in their gross domestic products. It is observed that gains from international trade are low in prosperous economies, but they are larger in poorer economies. Then, the paper investigates the impact of the index of international trade potential on renewable energy consumption in the unbalanced panel dataset of 36 Organisation for Economic Cooperation and Development member countries from 1966 to 2016. The novel evidence is that international trade potential is positively related to renewable energy consumption. It is also found that per capita income, per capita carbon dioxide emissions, and energy prices increase the demand for renewable energy.

Automated summary

This paper introduces a new measure of international trade potential and explores its impact on renewable energy consumption. It finds that gains from international trade are higher in poorer economies and that the trade potential index is positively related to renewable energy consumption. Additionally, it identifies factors such as per capita income, per capita carbon dioxide emissions, and energy prices that drive the demand for renewable energy.