Nuclear energy consumption and economic growth in the UK: Evidence from wavelet coherence approach

• Published date: 01 February 2021
• Author: Dervis Kirikkaleli,Festus Fatai Adedoyin,Festus Victor Bekun
• Date: 01 February 2021
• DOI: http://doi.org/10.1002/pa.2130

ACADEMIC PAPER

Nuclear energy consumption and economic growth in the UK:

Evidence from wavelet coherence approach

Dervis Kirikkaleli

1

|Festus Fatai Adedoyin

2

|Festus Victor Bekun

3,4

1

Department of Banking and Finance, Faculty

of Economic and Administrative Sciences,

European University of Lefke, Northern

Cyprus, Turkey

2

Department of Accounting, Economics and

Finance, Bournemouth University, Poole, UK

3

Faculty of Economics Administrative and

Social sciences, Istanbul Gelisim University,

Istanbul, Turkey

4

Department of Accounting, Analysis and

Audit, School of Economics and Management,

South Ural State University, Chelyabinsk,

Russia

Correspondence

Dervis Kirikkaleli, Department of Banking and

Finance, Faculty of Economic and

Administrative Sciences, European University

of Lefke, Lefke, Northern Cyprus, TR-10

Mersin, Turkey.

Email: dkirikkaleli@eul.edu.tr

The aim of this present study is to assess the causal link between nuclear energy con-

sumption and economic growth in the United Kingdom using Toda Yamamoto causal-

ity and wavelet coherence tests with the objective of responding to the following

questions: (a) Does consumption of nuclear energy lead to economic growth in the

United Kingdom and/or does economic growth lead to the consumption of nuclear

energy sources in the United Kingdom, and (b) if so, why? The findings from wavelet

coherence reveal that changes in economic growth lead to changes in nuclear energy

consumption in the United Kingdom at different frequencies, especially in the long-

run, and in different periods between 1998 and 2017. In addition, there is a positive

correlation between nuclear energy consumption and economic growth between

2002 and 2006 in the short-run. In this study, we also check the consistency of the

findings from wavelet coherence which is confirmed by the outcomes of Toda Yama-

moto causality test. Therefore, the present study is likely to attract great interest

from the policy-makers and researchers in this field. At the same time, it is likely to

start a new debate.

1|INTRODUCTION

The impact of energy consumption has been assessed in different

contexts, across countries, and using several data structures and

methodology. In fact, the reasons for the abundance of research on

energy issues are not far-fetched. Apart from raising concerns about

global emissions, the contribution of stable energy and electricity sup-

ply to achieving the growth prospects of nations has been at the fore-

front of many studies and the importance of such causality analysis

cannot be overestimated (Lau, Choong, Ng, Liew, & Ching, 2019).

Moreover, consumption of and access to stable power supply from

several energy sources is one of the focal points of developing as well

as developed countries like the United Kingdom. This is because it can

form a basis for sustainable economic and social development by

enabling businesses prosper with consequent improvement in the

standards of living. Thus, since energy consumption cannot be sepa-

rated from the growth prospects of a country, many governments

have sourced power from nuclear energy, which is a type of energy

generated when atoms split, and this is generated by the construction

of nuclear power plants.

Although, in comparison to other energy sources, nuclear energy

may be full of controversies; it remains an important aspect of elec-

tricity consumption in many developed countries and for sustainable

economic development (Toth & Rogner, 2006). For example, as shown

in Figure 1, the amount of electricity produced by nuclear sources is

significant across selected European countries with up to 79% in

France. Also, in recent times, the United Kingdom has demonstrated

an upward trend in its use of nuclear sources for generating energy.

Thus, it is worth investigating whether the observed trend has the

capacity to moderate the growth agenda and the corresponding direc-

tion of causality.

Interestingly, while some countries have decreased their use of

nuclear energy sources as is the case in Sweden, others have

increased their exploration of this energy source. In fact, Sweden's

exploration of energy from nuclear sources declined from nearly 50%

in 1999 to a little above 30% in 2015. This trend reinforces the need

to examine fresh evidence for the motivation for and impact of this

energy source. According to Wolde-Rufael and Menyah (2010), there

is a one way causality that runs from growth of the economy to the

consumption of nuclear energy for both Canada and Sweden. In the

Received: 4 January 2020Revised: 1 February 2020Accepted: 9 March 2020

DOI: 10.1002/pa.2130

J Public Affairs. 2021;21:e2130.wileyonlinelibrary.com/journal/pa© 2020 John Wiley & Sons, Ltd1of11

https://doi.org/10.1002/pa.2130