Is the Relationship Between Economic Growth and Energy Consumption in the G20 Non-Linear?

This paper investigates the complex, non-linear, and asymmetric dynamics linking economic growth and energy consumption within the G20 economies over the period 1992 to 2022.Employing the panel NARDL (Nonlinear Autoregressive Distributed Lag) approach, the analysis advances the empirical literature by shedding light on the differentiated effects that changes in energy consumption exert on economic expansion among the world's leading economies.The methodological framework integrates three estimators-Mean Group (MG), Pooled Mean Group (PMG), and Dynamic Fixed Effects (DFE)-to rigorously examine both short-term fluctuations and long-term equilibrium relationships.The empirical findings point to marked asymmetries in the energy-growth nexus.Notably, increases in energy consumption are found to foster economic growth, whereas reductions in energy use tend to produce even more substantial negative repercussions.For instance, according to the Mean Group estimator, corroborated by the Hausman specification test, a 1% uptick in energy consumption is associated with an estimated 2.9% rise in economic growth; conversely, a 1% decline in energy use corresponds to an approximate 3.1% contraction in growth.The analysis further controls for pivotal macroeconomic variables-including government expenditure, gross capital formation, inflation, and trade opennessthat collectively shape the interplay between energy and growth across G20 nations.These results carry significant policy implications, underscoring the necessity for nuanced energy transition strategies that simultaneously support sustained economic development and address environmental imperatives.The research stresses the importance of a measured approach to implementing energy-saving policies, advocating for gradual transitions to mitigate potential negative economic consequences.Ultimately, the study offers substantive insights for policymakers and stakeholders seeking to craft balanced energy and economic frameworks, thereby contributing to the broader objectives of