Cointegration And Causality Among Renewable Energy Consumption, Trade Openness and Economic Growth: The Case of Malaysia
This study examines the dynamic relationship between economic growth, trade openness, and renewable energy consumption in Malaysia from 1980 to 2018. Using cointegration and causality models, the empirical results suggest that there is a long-run relationship between economic growth, trade openness and renewable energy consumption. This evidence however does not hold in the short run. We find that no Granger causality running in either direction between 1) renewable energy consumption and economic growth; 2) trade openness and economic growth; and 3) trade openness and renewable energy consumption. One important implication of these results is that improvement in energy efficiency designed to reduce the reliance on energy consumption from the primary sources should be taken into consideration without affecting the country’s economic growth and trade.