Renewable Energies and Industrial Production in the USA: Does the Energy Source Matter?

Abstract

This paper aims to analyze the interaction between renewable energy consumption and the industrial production of the USA over the 1981-2015 period. Its contributions are related to the disaggregation of renewable energy sources (hydroelectric, geothermal, and biomass energy from wood, waste, and biofuel), to the consideration of industrial production instead of economic growth and to the impact of time and frequency. Based on monthly data, wavelet results show a positive comovement at low frequencies between industrial production and biomass energies only. The bootstrap rolling causality test shows that only hydroelectric and wood energy consumption Granger cause industrial production. However, this causal relationship is timevarying and renewable energies are particularly important in crisis periods because they help maintaining the energy independence of the country. Further policy implications are analyzed in the paper.