Asymmetric impacts of renewable energy consumption and economic complexity on economic growth in Saudi Arabia: Evidence from the NARDL model

Abstract This paper examines the asymmetric impacts of both renewable energy consumption and economic complexity on Saudi Arabia’s economic growth in a nonlinear autoregressive distributed lag (NARDL) framework. Symmetric and asymmetric causality tests are also used to test the direction of the causal relationships between the variables. The NARDL model is estimated using quarterly data over the period 2000Q1-2015Q4. The results indicate that the long-term impact of a negative shock in renewable energy consumption on economic growth is significantly negative, while the short-term impact of either positive or negative shocks has a significant positive effect. Moreover, both positive and negative shocks in economic complexity have significant negative effects on economic growth in the long term, while economic growth is only affected by the negative change in economic complexity in the short term. Meanwhile, the symmetric/asymmetric causality nexus between positive/negative shocks to either renewable energy consumption or economic complexity and positive/negative shocks to economic growth is found to be neutral.