Persistence of shocks on non-renewable and renewable energy consumption: evidence from 15 leading countries with Fourier unit root test

Abstract

© 2023, The Author(s), under exclusive licence to Springer Nature B.V.This paper investigates the persistence of shocks on non-renewable and renewable energy consumption for 15 leading countries by renewable energy consumption, over the period 1980–2018. For this aim, we apply Christopoulos and Leon-Ledesma (J Int Money Finance 29(6):1076–1093, 2010) Fourier ADF unit root test which structural breaks are included by using a trigonometric function to allow for smooth temporary mean changes rather than jump functions. In application, we do not need to specify the numbers, locations and the forms of the structural breaks a priori. The results give that shocks on non-renewable energy consumption per capita are persistent for 13 countries except Sweden and the United States; shocks on renewable energy consumption per capita are persistent for 12 countries except Canada, Sweden and the United Kingdom. Overall, we conclude that persistent policy implications on non-renewable energy consumption are more effective tool than transitory policy stances for 13 countries except Sweden and the United States whereas persistent policy implications on renewable energy consumption are more effective for 12 countries except Canada, Sweden and the United Kingdom. In other words, since the energy consumption returns to its trend path quickly, any policy will not be effective on non-renewable energy consumption for Sweden and the United States, and also on renewable energy consumption for Canada, Sweden and the United Kingdom.