The renewable energy consumption by sectors and household income growth in the United States

Abstract

In the United States, and in most countries, the real Gross Domestic Product grows at a faster pace than the real household income, thus the two indicators could potentially pose dissimilar information. Hence, the study considers the suitability of modeling the United States real disposable personal income (per capita) with the renewable energy consumption across the main sectors: electric and power, industrial and transportation, and residential and commercial. By employing the dynamic Autoregressive Distributed Lag (ARDL) approach, there is a significant and long-run increase in income (real disposable income) growth caused by a percent increase in the renewables consumed by the industrial sector during the examined period 1973:Q1-2018: Q2. The growth observed in the real growth disposable income with respect to the respective increase in renewable energy consumption in residential and commercial, electric and power is significantly more than the income growth. Similarly, the short-run dynamic is significant, like the Granger causality with feedback between income growth and industrial consumption. Granger causality also exists from the real disposable personal income to electric and powers sector consumption of renewable energy with feedback. The study proffers sustainable social and renewable energy mix policies for the United States.