Economic Freedom, Economic Growth, Renewable Energy Consumption and the Load Capacity Factor: Evidence from OECD Countries with Panel Quantile Regression Analysis

Abstract

In recent years, countries' efforts to increase their economic freedom have raised the question of how freedom will affect the environment. Therefore, in this study, the relationship between economic freedom, economic growth, renewable energy consumption, and load capacity factor (LCF) in OECD countries is analyzed by panel quantile regression analysis with annual data sets for 1996-2018. According to the findings obtained from quantile regression analysis, the LCC hypothesis is valid in OECD countries. Renewable energy consumption positively affects LCF, but this effect is less in high quantiles than in low quantiles. Moreover, economic freedom's effect on LCF is positive and significant in all quantiles. However, there are substantial differences in the coefficients by percentiles, and the impact of economic freedom is less in countries with low LCF than in countries with high LCF. These findings suggest that a higher level of economic freedom will increase the load capacity factor and contribute to improving environmental quality.