Effect of Economic Policy Uncertainty on renewable energy consumption: Pooled Mean Group approach

Recent research has examined the impact of economic policy uncertainty (EPU) on various aspects of macroeconomics, but limited studies have been conducted in the field of energy, especially renewable energy. In this study, the effect of EPU on renewable energy consumption (REC) in the Middle East and North Africa (MENA) during the period 2002-2020 has been done using the integrated Pooled Mean Group (PMG) approach. The variable used in EPU is obtained with a composite index that uncertainty in monetary, monetary and fiscal policies is calculated using ARCH and GARCH econometric models. The results of the study using the PMG econometric approach show that EPU has a negative and significant effect on REC, so that in the short run it reduces /159% and in the long run it reduces REC by 0.186% . According to the research results, the control variables of foreign direct investment, credits granted to the private sector and the market value of the capital market in both time, short and long term have increased the REC. The results of Granger causality analysis also show that there is a one-way causality relationship from EPU to REC.