STRUCTURAL BREAKS, RENEWABLE ENERGY AND ECONOMIC GROWTH IN TURKISH ECONOMY (1970-2016)

Abstract

This study deals with renewable energy consumption-economic growth link under the structural breaks in Turkey over the period 1970-2016. This study includes additional variables such as labor, fixed capital, financial development and openness into the models to investigate this relationship. We apply the classical tests such as PP and Ng-Perron test as well as the Lee-Strazicich test with two structural breaks to detect the stationarity of variables. We also apply the ARDL bounds test to carry out the cointegration analysis. The Toda-Yamamoto causality test is used for the causality analysis. The empirical findings show that i) there exists cointegration under the structural breaks; ii) renewable energy consumption positively affects economic growth; iii) there is a bidirectional causality between the variables, thus the feedback hypothesis is confirmed for Turkish economy; iv) the study can present important suggestions for policy makers.