On the Causal Relationship between Economic Growth and Renewable Energy Consumption: The Case of Turkey

Energy is one of the major factor for the economic growth. Countries have to produce more in order to achieve sustainable growth target. Thus, they have to consume more energy. Developed economies are trying to mini-mize the ecological damage as they are achieving their target economic growth rate. Efficient usage of renewa-ble energy sources is the corner stone of this effort. Turkey has planned to have high, sustainable economic growth rate.21st century is the time that CO2 emission has peaked. Hence, scientists have become more and more curious about high, sustainable and eco-friendly economic growth since the early days of 21st century. There are four hypothesizes regarding this matter. First hypothesis states that there are no causal relationship between economic growth and renewable energy consumption. Second hypothesis indicates that there is a uni-directional causality between economic growth and renewable energy consumption and causality runs from renewable energy consumption and economic growth. Third hypothesis stands for this, there is a unidirectional causality between economic growth and renewable energy consumption and it runs from economic growth and renewable energy consumption. Last hypothesis is called feedback hypothesis. It means that there is a bi-directional causal relationship between two variables. The current study investigates the causal relationship between economic growth and renewable energy con-sumption in Turkey between 1980 and 2013. Granger causality test is used to examine the causal relationships between economic growth and renewable energy consumption. Empirical evidence shows that, based on the Granger Causality Test, there is bi-directional Granger causality exists between economic growth and renewable energy consumption, results indicate that the renewable energy consumption cause real GDP, which can explain the role of renewable energy in stimulating economic growth in Turkey.