Scandinavian Working Papers in Economics

CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

No 2015:7: Renewable Energy Policy, Economic Growth and Employment in EU Countries: Gain without Pain?

Jurate Jaraite (), Amin Karimu (), Andrius Kažukauskas () and Paulius Kažukauskas
Additional contact information
Jurate Jaraite: CERE, Postal: USBE, Umeå University, SE-90187,
Amin Karimu: CERE, Postal: USBE, Umeå University, SE-90187,
Andrius Kažukauskas: CERE, Postal: USBE, Umeå University, SE-90187,
Paulius Kažukauskas: HIS

Abstract: Given the intensifying debates whether governments should use industrial policies to promote particular renewable energy technologies, the main objective of this study is to investigate the long-run effects of renewable energy support policies on economic growth and employment in 15 European Union (EU) member states for the 1990-2012 time period by using panel-data time-series econometric techniques. The first hypothesis is that the EU’s renewable energy support policies lead to technological advancement, followed by economy growth, in the long-run. The second hypothesis states that these policies at least generate an increase in output and employment in the short-run. In summary, our results provide some evidence in support of the second hypothesis, but, in contrary to the similar studies, our findings do not support the first hypothesis that these policies promote growth in the long-run.

Keywords: economic growth; EU; Granger causality; panel cointegration; policy; renewable energy

JEL-codes: O44; Q43; Q48

31 pages, June 8, 2015

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