Energy consumption and economic growth: Evidence from the economic community of West African States (ECOWAS)

Access to modern energy is believed to be a prerequisite for sustainable development, poverty alleviation and the achievement of the Millennium Development Goals.However, theoretical models and empirical results offer conflicting evidence on the relationship between energy consumption and economic growth that we remain largely unsure of the cause-and-effect nature of this relationship, if indeed a relationship exists at all.This paper tests, in a panel context, the long-run relationship between energy access, and economic growth for fifteen African countries from 1980 to 2008 by using recently developed panel cointegration techniques.We adopt a three-stage approach, consisting of panel unit root, panel cointegration and Granger causality tests to study the dynamic causal relationships between energy consumption, energy prices and growth as well as relationship between electricity consumption, prices and growth.Results show that GDP and energy consumption as well as GDP and electricity move together in the long-run. By estimating these long-run relationships and testing for causality using panel-based error correction models, we found unidirectional long-run and short-run causality. The causality is running from GDP to energy consumption in the short-run, and from energy consumption to GDP in the long-run. There is also evidence of unidirectional causality running from electricity consumption to GDP in the long-run.This study thus provides empirical evidence of long-run and causal relationships between energy consumption and economic growth for our sample of fifteen countries; suggesting that lack or limited access to modern energy services could hamper economic growth and compromise the development prospects of these countries.     

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.     

Electricity consumption and real GDP causality nexus: Evidence from ARDL bounds testing approach for 11 MENA countries

This paper investigates the short-run and long-run causality issues between electricity consumption and economic growth in the selected 11 Middle East and North Africa (MENA) countries by using Autoregressive Distributed Lag (ARDL) bounds testing approach of cointegration and vector error-correction models. It employs annual data covering the period from 1971 to 2006. The unit root tests results indicate that some of the variables for Algeria, Jordan, Tunisia and United Arab Emirates do not satisfy the underlying assumptions of the ARDL bounds testing approach of cointegration methodology before proceeding to the estimation stage. Thus, we drop these countries from the ARDL bounds testing approach of cointegration and causality analysis. The cointegration test results show that there is no cointegration between the electricity consumption and the economic growth in three of the seven countries (Iran, Morocco and Syria). Thus, causal relationship cannot be estimated for these countries. However, the cointegration and causal relationship is found in four countries (Egypt, Israel, Oman and Saudi Arabia). The overall results indicate that there is no relationship between the electricity consumption and the economic growth in most of the MENA countries. Further evidence indicates that policies for energy conservation can have a little or no impact on economic growth in most of the MENA countries.     

Electricity consumption–growth nexus: The case of Malaysia

The goal of this paper is to model the relationship between electricity consumption and real gross domestic product (GDP) for Malaysia in a bivariate and multivariate framework. We use time series data for the period 1971–2003 and apply the bounds testing approach to search for a long-run relationship. Our results reveal that electricity consumption, real GDP and price share a long-run relationship. The results of the autoregressive distributed lag (ARDL) estimates of long-run elasticity of electricity consumption on GDP are found to be around 0.7 and statistically significant. Finally, in the short-run, the results of the causality test show that there is a unidirectional causal flow from electricity consumption to economic growth in Malaysia. From these findings we conclude that Malaysia is an energy-dependent country, leading us to draw some policy implications. This paper adds support and validity, thus reducing the policy makers concern on the ambiguity of the electricity and growth nexus in Malaysia.     

Residential and non-residential electricity dynamics

This paper uses U.S. panel data to instrument and examine the dynamics of electricity within the world market while separating between both residential and non-residential electricity consumptions during the time period of 1990–2014. To better assess the true differences within each causal relationship, all panel data has been separated into one Full panel and three subpanels of High, Middle, and Low income. The empirical framework used consists of various tests that identify the existence of cross-sectional dependency, a Pesaran panel unit root test, a Westerlund panel cointegration test, and the Dumitrescu–Hurlin method of the Granger causality test. Furthermore, this paper utilizes DOLS to estimate any long-run elastic relations between real GDP and residential or non-residential electricity consumption. Based on the results, this paper determines that no long-run relationship exists between non-residential electricity consumption and economic growth throughout and that the relationship between residential electricity consumption and economic growth possesses unit elastic behavior in the long run. Other findings throughout imply causality moves from economic growth in the direction of residential electricity consumption for all panels.     

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.     

A dynamic panel study of economic development and the electricity consumption-growth nexus

This study examines the relationship between electricity consumption and economic growth for 88 countries categorized into four panels based on the World Bank income classification (high, upper middle, lower middle, and low income) within a multivariate panel framework over the period 1990–2006. The Larsson et al. (2001) panel cointegration test indicates there is a long-run equilibrium relationship between real GDP, coal consumption, real gross fixed capital formation, and the labor force for the high, upper middle, and lower middle income country panels. The results from the panel vector error correction models reveal (1) bidirectional causality between electricity consumption and economic growth in both the short- and long-run for the high income and upper-middle income country panels; (2) unidirectional causality from electricity consumption to economic growth in the short-run, but bidirectional causality in the long-run for the lower-middle income country panel; and (3) unidirectional causality from electricity consumption to economic growth for the low income country panel.     

Economic growth,energy consumption and CO2 emissions in India: a disaggregated causal analysis

This study examines the long-run and short-run causal relationships among energy consumption, real gross domestic product (GDP) and CO₂ emissions using aggregate and disaggregate (sectoral) energy consumption measures utilising annual data from 1971 to 2011. The autoregressive distributed lag bounds test reveals that there is a long-run relationship among the variables concerned at both aggregate and disaggregate levels. The Toda–Yamamoto causality tests, however, reveal that the long-run as well short-run causal relationship among the variables is not uniform across sectors. The weight of evidences of the study indicates that there is short-run causality from electricity consumption to economic growth, and to CO₂ emissions. The results suggest that India should take appropriate cautious steps to sustain high growth rate and at the same time to control emissions of CO₂. Further, energy and environmental policies should acknowledge the sectoral differences in the relationship between energy consumption and real gross domestic product.     

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.     

The relationship between GDP and electricity consumption in 10 Asian countries

The purpose of this study is to estimate the relationships between GDP and electricity consumption in 10 newly industrializing and developing Asian countries using both single data sets and panel data procedures. The empirical results from single data set indicate that the causality directions in the 10 Asian countries are mixed while there is a uni-directional short-run causality running from economic growth to electricity consumption and a bi-directional long-run causality between electricity consumption and economic growth if the panel data procedure is implemented. These empirical findings imply that electricity conservation policies through both rationalizing the electricity supply efficiency improvement to avoid the wastage of electricity and managing demand side to reduce the electricity consumption without affecting the end-user benefits could be initiated without adverse effect on economic growth. The findings on the long-run relationship indicate that a sufficiently large supply of electricity can ensure that a higher level of economic growth.     

Energy consumption and economic growth in Central America: Evidence from a panel cointegration and error correction model

This study examines the relationship between energy consumption and economic growth for six Central American countries over the period 1980–2004 within a multivariate framework. Given the relatively short span of the time series data, a panel cointegration and error correction model is employed to infer the causal relationship. Based on the heterogeneous panel cointegration test by Pedroni (Pedroni, P., 1999. Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics 61, 653–670; Pedroni, P., 2004. Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis: new results. Econometric Theory 20, 597–627), cointegration is present between real GDP, energy consumption, the labor force, and real gross fixed capital formation with the respective coefficients positive and statistically significant. The Granger-causality results indicate the presence of both short-run and long-run causality from energy consumption to economic growth which supports the growth hypothesis.     

Economic growth-electricity consumption causality in 12 European countries: A dynamic panel data approach

This paper applies recent panel methodology to investigate the long-run and causal relationship between electricity consumption and real GDP for a set of 12 European countries using annual data for the period 1970–2007. The sample countries have moved faster than other neighboring countries towards the creation of a single electricity market over the past 30 years. Energy prices are also included in the study due to their important role in affecting the above variables, thus avoiding the problem of omitted variable bias. Tests for panel unit roots, cointegration in heterogeneous panels and panel causality are employed in a trivariate VECM estimated by system GMM. The results show evidence of a long-run equilibrium relationship between the three series and a negative short-run and strong causality from electricity consumption to GDP. As expected, there is bidirectional causality between energy prices and GDP and weaker evidence between electricity consumption and energy prices. These results support the policies implemented towards the creation of a common European electricity market.     

Panel estimation for CO2 emissions,energy consumption,economic growth,trade openness and urbanization of newly industrialized countries

This paper empirically examines the dynamic causal relationships between carbon dioxide emissions, energy consumption, economic growth, trade openness and urbanization for the panel of newly industrialized countries (NIC) using the time series data for the period 1971–2007. Using four different panel unit root tests it is found that all panel variables are integrated of order 1. From the Johansen Fisher panel cointegration test it is found that there is a cointegration vector among the variables. The Granger causality test results support that there is no evidence of long-run causal relationship, but there is unidirectional short-run causal relationship from economic growth and trade openness to carbon dioxide emissions, from economic growth to energy consumption, from trade openness to economic growth, from urbanization to economic growth and from trade openness to urbanization. It is found that the long-run elasticity of carbon dioxide emissions with respect to energy consumption (1.2189) is higher than short run elasticity of 0.5984. This indicates that over time higher energy consumption in the newly industrialized countries gives rise to more carbon dioxide emissions as a result our environment will be polluted more. But in respect of economic growth, trade openness and urbanization the environmental quality is found to be normal good in the long-run.     

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.     

Natural gas consumption and economic growth: Are we ready to natural gas price liberalization in Iran?

This paper examines the relationship between natural gas consumption and economic growth in Iran within a multivariate production model. We also investigate the effects of natural gas price on its consumption and economic growth using a demand side model. The paper employs bounds test approach to level relationship over the period of 1972–007. We find evidence of bidirectional positive relationship between natural gas consumption and economic growth in short-run and long-run, based on the production model. The findings also suggest that real GDP growth and natural gas have positive and negative impacts on gross fixed capital formation, respectively. Employment, however, was found to have negative but insignificant impact on gross fixed capital formation. Moreover, the estimation results of demand side model suggest that natural gas price has negative and significant impact on natural gas consumption only in the long-run, though there is insignificant impact on economic growth. These results imply that the Iranian government's decision for natural gas price liberalization has the adverse effects on economic growth and policy makers should be cautious in doing this policy.     

Coal consumption and economic growth: Evidence from a panel of OECD countries

This study examines the relationship between coal consumption and economic growth for 25 OECD countries within a multivariate panel framework over period 1980–2005. The Larsson et al. (2001) panel cointegration test indicates there is a long-run equilibrium relationship between real GDP, coal consumption, real gross fixed capital formation, and the labor force. The respective coefficients for real gross fixed capital formation and the labor force are positive and statistically significant whereas the coefficient for coal consumption is negative and statistically significant. The results of the panel vector error correction model reveal bidirectional causality between coal consumption and economic growth in both the short- and long-run; however, the bidirectional causality in the short-run is negative.     

Energy consumption and GDP in Tunisia: Cointegration and causality analysis

In this paper, the Johansen cointegration technique is used to examine the causal relationship between per capita energy consumption (PCEC) and per capita gross domestic product (PCGDP) for Tunisia during the 1971–2004 period. In order to test for Granger causality in the presence of cointegration among the variables, a vector error correction model (VECM) is used instead of a vector autoregressive (VAR) model. Our estimation results indicate that the PCGDP and PCEC for Tunisia are related by one cointegrating vector and that there is a long-run bi-directional causal relationship between the two series and a short-run unidirectional causality from energy to gross domestic product (GDP). The source of causation in the long-run is found to be the error-correction terms in both directions. Hence, an important policy implication resulting from this analysis is that energy can be considered as a limiting factor to GDP growth in Tunisia. Conclusions for Tunisia may also be relevant for a number of countries that have to go through a similar development path of increasing pressure on already scarce energy resources.     

Energy consumption and economic growth relationship: Evidence from panel data for low and middle income countries

This paper uses the panel data of energy consumption (EC) and economic growth (GDP) for 51 countries from 1971 to 2005. These countries are divided into three groups: low income group, lower middle income group and upper middle income group countries. Firstly, a relationship between energy consumption and economic growth is investigated by employing Pedroni (1999) panel cointegration method. Secondly, panel causality test is applied to investigate the way of causality between the energy consumption and economic growth. Finally, we test whether there is a strong or weak relationship between these variables by using Pedroni (2001) method. The empirical results of this study are as follows: i) Energy consumption and GDP are cointegrated for all three income group countries. ii) The panel causality test results reveal that there is long-run Granger causality running from GDP to EC for low income countries and there is bidirectional causality between EC and GDP for middle income countries. iii) The estimated cointegration factor, β, is not close to 1. In other words, no strong relation is found between energy consumption and economic growth for all income groups considered in this study. The findings of this study have important policy implications and it shows that this issue still deserves further attention in future research.     

The impact of coal consumption and CO2 emission on economic growth

This study examined the long-run and the causal relationship between total coal consumption, CO₂ emission, and GDP growth in China, the United States, India, Germany, Russia, South Africa, Japan, Australia, Poland, and South Korea. The panel model was employed during the period 1992–2009. The results showed that total coal consumption and CO₂ emission have a long-run relationship with the GDP growth. In addition, there was a short-run positive bidirectional causal relationship between total coal consumption and CO₂ emission. However, total coal consumption and CO₂ emission have no short-run or long-run causal relationship with GDP growth. Thus energy conservation policies on total coal consumption such as rationing energy consumption and controlling CO₂ emissions are likely to have no negative impact on the real output growth of the investigated countries.