An Analysis of Economic Real Variables' Impact on Renewable Energy Production (REP) Using the Autoregressive Distributed Lag (ARDL) Model

This paper tries to investigate the connections between renewable energy production and real economic factors such as gross domestic product (GDP), gross fixed capital formation (GFCF), and public-private partnership (PPP) based investment in energy in India. We use the autoregressive distributed lag (ARDL) model to examine the short- and long-term impacts of these factors. Data were obtained from the World Development Indicators covering 1991 to 2022. After reviewing previous literature, we use the ARDL model as the foundation for this study. The dataset compilation and empirical estimation have been conducted. The analytical evidence shows that in the short-run, present GDP has no effect, and PPP investment in energy and gross fixed capital formation lags have significant effects. The error correction model indicates a significant 51% short-run deviation that is adjusted in the long period. However, in the long run, GDP and PPP investment in energy have positive effects, while GFCF has a negative effect because it remains constant in the future. Our model fits and performs well on diagnostic tests, giving satisfactory and consistent results.