Causality relationship between coal consumption and GDP: Difference of major OECD and non-OECD countries

This paper uses Granger causality tests to examine the differences of causal relationships between coal consumption and GDP in major OECD and non-OECD countries, using data for the period of 1980–2005. What we discovered is that unidirectional causality running from GDP to coal consumption exists in Japan and China, and no causality relationship between coal consumption and GDP in India, South Korea and South Africa while the series are not cointegrated in USA. The major OECD or non-OECD countries especially China, India and South Africa should reduce their CO₂ emissions in coal consumption to reach sustainable development.     

Energy consumption and economic growth: The experience of African countries revisited

The aim of this paper is to re-examine the causal relationship between energy consumption and economic growth for seventeen African countries in a multivariate framework by including labor and capital as additional variables. We apply the variance decomposition analysis due to Pesaran and Shin [Pesaran M.H. and Shin, Y. Generalised impulse response analysis in linear multivariate models, Economics Letters, 1998; 58; 17–29.] to evaluate how important is the causal impact of energy consumption on economic growth relative to labor and capital. The results of our multivariate modified Granger causality analysis due to Toda and Yamamoto [Toda, H.Y. and Yamamoto, T. Statistical inference in vector autoregressions with possibly integrated process, Journal of Econometrics, 1995; 66; 225–250.] tend to reject the neutrality hypothesis for the energy–income relationship in fifteen out of the seventeen countries. In contrast, results of our variance decomposition analyses show that in eleven out of the seventeen countries, energy is no more than a contributing factor to output growth and not an important one when compared to capital and labor. Labor and capital are the most important factors in output growth in fifteen out of the seventeen countries. However, these results should be interpreted with care as they may not be sufficiently robust enough to support the inference that energy consumption plays a minor role in the economic growth of African countries.     

The causality relationship between energy consumption and GDP in G-11 countries revisited

This paper explores whether energy conservation policies can be implemented in countries with the same level of development. That is, is restraining energy consumption without compromising economic growth feasible in all industrialized countries? A new Granger non-causality testing procedure developed by Toda and Yamamoto [1995, Journal of Econometrics 66, 225–250] is applied to re-investigate the relationship, if any, between energy consumption and income in 11 major industrialized countries. The results clearly do not support the view that energy consumption and income are neutral with respect to each other, except in the case of the United Kingdom, Germany and Sweden where a neutral relationship is found. Bi-directional causality in the United States and uni-directional running from energy consumption to GDP in Canada, Belgium, the Netherlands and Switzerland are found. This indicates that energy conservation may hinder economic growth in the latter five countries. Further, the causality relationship appears to be uni-directional but reversed for France, Italy and Japan which implies that, in these three countries, energy conservation may be viable without being detrimental to economic growth.     

Bounds test approach to cointegration and causality between nuclear energy consumption and economic growth in India

This paper attempts to examine the dynamic relationship between economic growth, nuclear energy consumption, labor and capital for India for the period 1969–2006. Applying the bounds test approach to cointegration developed by Pesaran et al. (2001) we find that there was a short- and a long-run relationship between nuclear energy consumption and economic growth. Using four long-run estimators we also found that nuclear energy consumption has a positive and a statistically significant impact on India's economic growth. Further, applying the Toda and Yamamoto (1995) approach to Granger causality and the variance decomposition approach developed by Pesaran and Shin (1998), we found a positive and a significant uni-directional causality running from nuclear energy consumption to economic growth without feedback. This implies that economic growth in India is dependent on nuclear energy consumption where a decrease in nuclear energy consumption may lead to a decrease in real income. For a fast growing energy-dependent economy this may have far-reaching implications for economic growth. India's economic growth can be frustrated if energy conservation measures are undertaken without due regard to the negative impact they have on economic growth.     

Electricity consumption and economic growth: a time series experience for 17 African countries

While the availability of electricity by itself is not a panacea for the economic and social problems facing Africa, the supply of electricity is nevertheless believed to be a necessary requirement for Africa's economic and social development. This paper tests the long-run and causal relationship between electricity consumption per capita and real gross domestic product (GDP) per capita for 17 African countries for the period 1971–2001 using a newly developed cointegration test proposed by Pesaran et al. (2001) and using a modified version of the Granger causality test due to Toda and Yamamoto (1995). The advantage of using these two approaches is that they both avoid the pre-testing bias associated with conventional unit root and cointegration tests. The empirical evidence shows that there was a long-run relationship between electricity consumption per capita and real GDP per capita for only 9 countries and Granger causality for only 12 countries. For 6 countries there was a positive uni-directional causality running from real GDP per capita to electricity consumption per capita; an opposite causality for 3 countries and bi-directional causality for the remaining 3 countries. The result should, however, be interpreted with care as electricity consumption accounts for less than 4% of total energy consumption in Africa and only grid-supplied electricity is taken into account.     

Economic growth and energy consumption revisited — Evidence from linear and nonlinear Granger causality

The relationship between energy consumption and economic growth is considered as an imperative issue in energy economics. Previous studies have ignored the nonlinear behavior which could be caused by structural breaks. In this study, both linear and nonlinear Granger causality tests are applied to examine the causal relationship between energy consumption and economic growth for a sample of Asian newly industrialized countries as well as the U.S. This study finds evidence supporting a neutrality hypothesis for the United States, Thailand, and South Korea. However, empirical evidence on Philippines and Singapore reveals a unidirectional causality running from economic growth to energy consumption while energy consumption may have affected economic growth for Taiwan, Hong Kong, Malaysia and Indonesia. Policy implications are also discussed.     

CO2 emissions,electricity consumption and output in ASEAN

This study examines the causal relationship between carbon dioxide emissions, electricity consumption and economic growth within a panel vector error correction model for five ASEAN countries over the period 1980–2006. The long-run estimates indicate that there is a statistically significant positive association between electricity consumption and emissions and a non-linear relationship between emissions and real output, consistent with the environmental Kuznets curve. The long-run estimates, however, do not indicate the direction of causality between the variables. The results from the Granger causality tests suggest that in the long-run there is unidirectional Granger causality running from electricity consumption and emissions to economic growth. The results also point to unidirectional Granger causality running from emissions to electricity consumption in the short-run.     

The relationship between CO2 emissions,energy consumption and economic growth in Italy

This study examines the relationship between CO₂ emissions, energy consumption and economic growth in Italy over the period 1970–2006. Results of unit root tests show that all variables are non-stationary in their level form, but stationary in first differences form. The causal relationship between variables is examined using causality test in a vector autoregressive framework. Our empirical results show that CO₂ emissions, energy consumption and economic growth are not cointegrated. Moreover, the Toda and Yamamoto Granger non-causality test shows a bidirectional causality between CO₂ emissions and economic growth, as well as between CO₂ emissions and energy consumption. Forecast error variance decompositions evidence that the errors in real per capita GDP are mainly due to uncertainty in GDP itself, while the errors in predicting the energy consumption and the CO₂ emissions are sensitive to disturbances in the other two equations.     

Nuclear energy consumption, oil prices, and economic growth: Evidence from highly industrialized countries

This study utilizes the Johansen cointegration technique, the Granger non-causality test of Toda and Yamamoto (1995), the generalized impulse response function, and the generalized forecast error variance decomposition to examine the dynamic interrelationship among nuclear energy consumption, real oil price, oil consumption, and real income in six highly industrialized countries for the period 1965-2008. Our empirical results indicate that the relationships between nuclear energy consumption and oil are as substitutes in the U.S. and Canada, while they are complementary in France, Japan, and the U.K. Second, the long-run income elasticity of nuclear energy is larger than one, indicating that nuclear energy is a luxury good. Third, the results of the Granger causality test find evidence of unidirectional causality running from real income to nuclear energy consumption in Japan. A bidirectional relationship appears in Canada, Germany and the U.K., while no causality exists in France and the U.S. We also find evidence of causality running from real oil price to nuclear energy consumption, except for the U.S., and causality running from oil consumption to nuclear energy consumption in Canada, Japan, and the U.K., suggesting that changes in price and consumption of oil influence nuclear energy consumption. Finally, the results observe transitory initial impacts of innovations in real income and oil consumption on nuclear energy consumption. In the long run the impact of real oil price is relatively larger compared with that of real income on nuclear energy consumption in Canada, Germany, Japan, and the U.S.     

Energy consumption and economic growth: Evidence from China at both aggregated and disaggregated levels

Using a neo-classical aggregate production model where capital, labor and energy are treated as separate inputs, this paper tests for the existence and direction of causality between output growth and energy use in China at both aggregated total energy and disaggregated levels as coal, oil and electricity consumption. Using the Johansen cointegration technique, the empirical findings indicate that there exists long-run cointegration among output, labor, capital and energy use in China at both aggregated and all three disaggregated levels. Then using a VEC specification, the short-run dynamics of the interested variables are tested, indicating that there exists Granger causality running from electricity and oil consumption to GDP, but does not exist Granger causality running from coal and total energy consumption to GDP. On the other hand, short-run Granger causality exists from GDP to total energy, coal and oil consumption, but does not exist from GDP to electricity consumption. We thus propose policy suggestions to solve the energy and sustainable development dilemma in China as: enhancing energy supply security and guaranteeing energy supply, especially in the short run to provide adequate electric power supply and set up national strategic oil reserve; enhancing energy efficiency to save energy; diversifying energy sources, energetically exploiting renewable energy and drawing out corresponding policies and measures; and finally in the long run, transforming development pattern and cut reliance on resource- and energy-dependent industries.     

Electricity consumption and economic growth nexus in Bangladesh: Revisited evidences

In this paper, an attempt is being made to examine the causal relationship between per capita electricity consumption and per capita GDP of Bangladesh using the vector error correction specified Granger causality test to search their short-run, long-run and joint causal relationships for the period of 1971–2008. Empirical findings reveal that there is a short-run unidirectional causal flow running from per capita electricity consumption to per capita GDP without feedback. The presence of a positive short-run causality explains that an increase in electricity consumption directly affects economic activity in Bangladesh. Likewise, results from joint causality exhibit the same as in short-run. By contrast, long-run results show a bi-directional causality running from electricity consumption to economic growth with feedback. These findings can provide essential policy insights to design immediate and long-term growth prospect for Bangladesh keeping in mind its present planned growth strategy and dismal power and energy sector.     

Causality between energy consumption and economic growth in India: a note on conflicting results

This note examines the different direction of causal relation between energy consumption and economic growth in India. Applying Engle–Granger cointegration approach combined with the standard Granger causality test on Indian data for the period 1950–1996, we find that bi-directional causality exists between energy consumption and economic growth. Further, we apply Johansen multivariate cointegration technique on the different set of variables. The same direction of causality exists between energy consumption and economic growth. This is different from the results obtained in earlier studies.     

Disaggregate energy consumption and industrial production in South Africa

This paper tries to assess the relationship between disaggregate energy consumption and industrial output in South Africa by undertaking a cointegration analysis using annual data from 1980 to 2005. We also investigate the causal relationships between the various disaggregate forms of energy consumption and industrial production. Our results imply that industrial production and employment are long-run forcing variables for electricity consumption. Applying the [Toda, H.Y., Yamamoto, T., 1995. Statistical inference in vector autoregressions with possibly integrated processes. Journal of Econometrics 66, 225–250] technique to Granger-causality, we find bi-directional causality between oil consumption and industrial production. For the other forms of energy consumption, there is evidence in support of the energy neutrality hypothesis. There is also evidence of causality between employment and electricity consumption as well as coal consumption causing employment.     

Causal relationship between coal consumption and economic growth in Korea

This paper investigates the short- and long-run causality issues between coal consumption and economic growth in Korea by applying modern time-series techniques. It employs annual data covering the period 1968–2002. Tests for unit roots, co-integration, and Granger-causality based on error-correction model are presented. The overall results show that there exists bi-directional causality running from coal consumption to economic growth with feedback. This means that an increase in coal consumption directly affects economic growth. Thus, in order not to adversely affect economic growth, Korea should endeavor to overcome the constraints on coal consumption. Moreover, the study lends support to the argument that an increase in real income gives rise to increased coal consumption.     

Electricity consumption and economic growth: Evidence from Turkey

This study investigates the causal relationship between electricity consumption and real GDP in Turkey during the period of 1950–2000. Both of the series were found to be a stationary process around a structural break by the Zivot and Andrews test. Thus, two different methodologies have been employed to test the Granger non-causality: the Dolado–Lütkepohl test using the VARs in levels, and the standard Granger causality test using the detrended data. Both tests have yielded a strong evidence for unidirectional causality running from the electricity consumption to the income. This implies that the supply of electricity is vitally important to meet the growing electricity consumption, hence to sustain the economic growth in Turkey.     

The dynamic impact of renewable energy consumption and financial development on CO2 emissions: For selected African countries

This empirical study examines the impact of economic growth, renewable energy, energy consumption, financial developments, trade openness, and urbanization growth on CO₂ emissions using the Pooled Mean Group (PMG) approach and Granger Causality in the EKC model a data set of 25 African countries over the period 1985–2015. The results showed that increases in renewable energy consumption and trade openness decrease CO₂ emissions, and the EKC hypothesis is supported for the African countries. Granger’s causality results indicated the presence of bidirectional causality between economic growth and financial development and CO₂ emissions. These results could support policymakers manage financial development and consider clean investments and other ecological aspects for sustainable urban development. The causality tests showed a unidirectional causality running from renewable energy consumption to CO₂ emissions in African countries.     

Electricity consumption and economic growth nexus in Portugal using cointegration and causality approaches

The aim of this paper is to re-examine the relationship between electricity consumption, economic growth, and employment in Portugal using the cointegration and Granger causality frameworks. This study covers the sample period from 1971 to 2009. We examine the presence of a long-run equilibrium relationship using the bounds testing approach to cointegration within the Unrestricted Error-Correction Model (UECM). Moreover, we examine the direction of causality between electricity consumption, economic growth, and employment in Portugal using the Granger causality test within the Vector Error-Correction Model (VECM). As a summary of the empirical findings, we find that electricity consumption, economic growth, and employment in Portugal are cointegrated and there is bi-directional Granger causality between the three variables in the long-run. With the exception of the Granger causality between electricity consumption and economic growth, the rest of the variables are also bi-directional Granger causality in the short-run. Furthermore, we find that there is unidirectional Granger causality running from economic growth to electricity consumption, but no evidence of reversal causality.     

Electricity consumption and economic growth in China: Cointegration and co-feature analysis

This paper applies the cointegration theory to examine the causal relationship between electricity consumption and real GDP (Gross Demostic Product) for China during 1978–2004. Our estimation results indicate that real GDP and electricity consumption for China are cointegrated and there is only unidirectional Granger causality running from electricity consumption to real GDP but not the vice versa. Then Hodrick–Prescott (HP) filter is applied to decompose the trend and fluctuation component of the GDP and electricity consumption series. The estimation results indicate that there is cointegration between not only the trend components, but also the cyclical components of the two series, which implies that, the Granger causality is probably related with the business cycle. The estimation results are of policy implication to the development of electric sector in China.     

Environmental degradation,economic growth and energy consumption: Evidence of the environmental Kuznets curve in Malaysia

This paper tests for the short and long-run relationship between economic growth, carbon dioxide (CO₂) emissions and energy consumption, using the Environmental Kuznets Curve (EKC) by employing both the aggregated and disaggregated energy consumption data in Malaysia for the period 1980–2009. The Autoregressive Distributed Lag (ARDL) methodology and Johansen–Juselius maximum likelihood approach were used to test the cointegration relationship; and the Granger causality test, based on the vector error correction model (VECM), to test for causality. The study does not support an inverted U-shaped relationship (EKC) when aggregated energy consumption data was used. When data was disaggregated based on different energy sources such as oil, coal, gas and electricity, the study does show evidences of the EKC hypothesis. The long-run Granger causality test shows that there is bi-directional causality between economic growth and CO₂ emissions, with coal, gas, electricity and oil consumption. This suggests that decreasing energy consumption such as coal, gas, electricity and oil appears to be an effective way to control CO₂ emissions but simultaneously will hinder economic growth. Thus suitable policies related to the efficient consumption of energy resources and consumption of renewable sources are required.     

Energy consumption and economic growth in the USA: Evidence from renewable energy

Recent debates about renewable energy consumption manifest two main expectations. Firstly, renewable energy consumption should contribute to economic growth and secondly, it should not cause damage on environment. This study focuses on the first issue by applying Toda–Yamamoto procedure and bootstrap-corrected causality test for the US since empirical literature criticizes the Toda–Yamamoto test which bases on asymptotic distribution. The models consist of real GDP, employment, investment and kinds of renewable energy consumption. Only one causal relationship was found from biomass-waste-derived energy consumption to real GDP. No causal relationship was found between real GDP and all of the other renewable energy kinds—total renewable energy consumption, geothermal energy consumption, hydro-electric energy consumption, biomass energy consumption and biomass-wood-derived energy consumption. That is using of energy from waste cause not only solving the dumping problems but also it contributes to real GDP. For policy purpose, the results of this study suggest that countries should concentrate on energy producing from waste as an alternative energy resource.