Biomass energy and economic growth nexus in G7 countries: Evidence from dynamic panel data
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The purpose of this paper is to reveal the long run dynamics of biomass energy consumption and GDP growth through homogeneous and heterogeneous variance structures for G7 countries. It covers annual data from 1980 to 2009. Panel unit root analyses, panel cointegration analyses, conventional OLS and dynamic OLS analyses are run throughout homogeneous and heterogeneous variance structures of the panel data to examine the relationship. The findings show that the long run elasticities of panel real GDP data in terms of panel capital stock, panel human capital index and panel biomass consumption are significant and positive. The results confirmed the growth hypothesis in which biomass energy consumption have positive effects on economic growth of G7 countries. As a policy implication, energy policies which improve the biomass energy infrastructure and biomass supply are the appropriate options for G7 countries since biomass energy consumption increases the economic growth.