Causal relationship between nuclear energy consumption and economic growth in G6 countries: Evidence from panel Granger causality tests

• We study the causality and its direction between nuclear energy and GDP.
• The G7 (except Italy) are studied from 1971 to 2011.
• Unidirectional causality from growth to nuclear for five countries.
• Except UK -bidirectional causality was found.

Looking at the recent nuclear accident in Fukushima, Japan, the consequences were not just environmental or economic. The accident was a big hit to the reputation and trust in nuclear power generation making a number of countries reconsider the nuclear energy as an option. The recent financial crisis might have limited even more the developed countries from the necessary capital to invest in expensive power options but this might change in the future if the positive environmental effects of the nuclear power can be proven substantial. The purpose of this paper is to analyse the causal link between nuclear energy consumption and economic growth for six developed countries over the period from 1971 to 2011. Granger causality procedure based on Meta-analysis in heterogeneous mixed panels is used to allow for cross-sectional dependency and heterogeneity across countries. The empirical findings for the overall panel support the presence of unidirectional causality running from economic growth to nuclear energy consumption across the G-6 countries. However, in the case of UK we find a bidirectional causality running from nuclear energy consumption to economic growth; while the results for Germany confirm the growth hypothesis and for the rest of the countries the neutrality hypothesis.