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.     

Natural gas consumption and economic growth: A panel investigation of 67 countries

This study examines the relationship between natural gas consumption and economic growth for a panel of 67 countries within a multivariate framework over the period 1992–2005. Pedroni’s 24 and 26 heterogeneous panel cointegration test reveals there is a long-run equilibrium relationship between real GDP, natural gas consumption, real gross fixed capital formation, and the labor force. The results of the panel vector error correction model reveal bidirectional causality between natural gas consumption and economic growth in both the short- and long-run.     

The causal dynamics between coal consumption and growth: Evidence from emerging market economies

This study examines the relationship between coal consumption and economic growth for 15 emerging market economies within a multivariate panel framework over the period 1980–2006. The heterogeneous panel cointegration results indicate there is a long-run equilibrium relationship between real GDP, coal consumption, real gross fixed capital formation, and the labor force. While in the long-run both real gross fixed capital formation and the labor force have a significant positive impact on real GDP, coal consumption has a significant negative impact. The panel causality tests show bidirectional causality between coal consumption and economic growth in both the short- and long-run.     

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.     

The renewable energy consumption–growth nexus in Central America

This study examines the relationship between renewable energy consumption and economic growth for a panel of six Central American countries over the period 1980–2006. The heterogeneous panel cointegration test reveals a long-run equilibrium relationship between real GDP, renewable energy consumption, real gross fixed capital formation, and the labor force with the respective coefficients positive and statistically significant. The results from the panel error correction model indicate bidirectional causality between renewable energy consumption and economic growth in both the short- and long-run.     

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

This study examines the relationship between renewable energy consumption and economic growth for a panel of twenty OECD countries over the period 1985–2005 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. The heterogeneous panel cointegration test reveals a long-run equilibrium relationship between real GDP, renewable energy consumption, real gross fixed capital formation, and the labor force with the respective coefficients positive and statistically significant. The Granger-causality results indicate bidirectional causality between renewable energy consumption and economic growth in both the short- and long-run.     

Energy consumption and economic growth: Evidence from the Commonwealth of Independent States

This study examines the relationship between energy consumption and economic growth for eleven countries of the Commonwealth of Independent States over the period 1991–2005 within a multivariate panel data framework. Based on (Pedroni, 1999) and (Pedroni, 2004) heterogeneous panel cointegration test and corresponding error correction model, cointegration is present between real GDP, energy consumption, real gross fixed capital formation, and labor force with the respective coefficients positive and statistically significant. The results of the error correction model reveal the presence of unidirectional causality from energy consumption to economic growth in the short-run while bidirectional causality between energy consumption and economic growth in the long-run. Thus, the results lend support for the feedback hypothesis associated with the relationship between energy consumption and 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.     

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.     

A literature survey on energy–growth nexus

This paper provides a survey of the recent progress in the literature of energy consumption–economic growth and electricity consumption–economic growth causality nexus. The survey highlights that most empirical studies focus on either testing the role of energy (electricity) in stimulating economic growth or examining the direction of causality between these two variables. Although the positive role of energy on growth has become a stylized fact, there are some methodological reservations about the results from these empirical studies. A general observation from these studies is that the literature produced conflicting results and there is no consensus neither on the existence nor on the direction of causality between energy consumption (electricity consumption) and economic growth. As a policy implication, to avoid from conflicting and unreliable results, the authors may use the autoregressive distributed lags bounds test, two-regime threshold co-integration models, panel data approach and multivariate models including new variables (such as: real gross fixed capital formation, labor force, carbon dioxide emissions, population, exchange rates, interest rates, etc.). Thus, the authors should focus more on the new approaches and perspectives rather than by employing usual methods based on a set of common variables for different countries and different intervals of time.     

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.     

Electricity consumption and economic growth in Algeria: A multivariate causality analysis in the presence of structural change

This article addresses the issue of electricity consumption, petroleum price and economic growth in Algeria. The primary objective is to investigate and analyze the causal relationship between electricity consumption (EC), Brent oil price (BOP) and economic growth (GDP) for Algeria over the period of 1971–2010. To examine short-run, long-run and joint causality relationships we used a multivariate cointegration approach based on the recent advances in time series econometrics (e.g., Zivot–Andrews test; Gregory–Hansen cointegration test; Vector Error Correction Models (VECM)). The empirical results show that there is evidence of short-run and a strong long-run bi-directional causal relationship between EC and real GDP in Algeria. Findings indicate also the absence of causal relationship between BOP and EC. Our empirical findings support the idea that there a link between electricity consumption and economic growth and disproves the neo-classical assumption referred to as the “neutrality hypothesis”.     

Energy consumption and economic growth in New Zealand: Results of trivariate and multivariate models

This study examines the energy consumption–growth nexus in New Zealand. Causal linkages between energy and macroeconomic variables are investigated using trivariate demand-side and multivariate production models. Long run and short run relationships are estimated for the period 1960–2004. The estimated results of demand model reveal a long run relationship between energy consumption, real GDP and energy prices. The short run results indicate that real GDP Granger-causes energy consumption without feedback, consistent with the proposition that energy demand is a derived demand. Energy prices are found to be significant for energy consumption outcomes. Production model results indicate a long run relationship between real GDP, energy consumption and employment. The Granger-causality is found from real GDP to energy consumption, providing additional evidence to support the neoclassical proposition that energy consumption in New Zealand is fundamentally driven by economic activities. Inclusion of capital in the multivariate production model shows short run causality from capital to energy consumption. Also, changes in real GDP and employment have significant predictive power for changes in real capital.     

The causal relationship between energy consumption and GDP in Albania,Bulgaria, Hungary and Romania: Evidence from ARDL bound testing approach

The purpose of this study is to investigate the causal relationship between energy and economic growth in Albania, Bulgaria, Hungary and Romania from 1980 to 2006 by employing energy use per capita, electric power consumption per capita and real GDP per capita variables. To examine this linkage, we use the two-step procedure from the Engle and Granger model: In first step, we explore the long-run relationships between the variables by using recently developed autoregressive distributed lag (ARDL) bounds testing approach of cointegration. Secondly, we employ a dynamic vector error correction (VEC) model to test causal relationships between variables. The bounds test yields evidence of a long-run relationship between energy use per capita and real GDP per capita and evidence of two-way (bidirectional) strong Granger causality between these variables only in Hungary. On the other hand, the ARDL bounds test results show that there is no a unique long-term or equilibrium relationship between energy consumption variables and real GDP per capita in Albania, Bulgaria and Romania. In other words, no cointegration exists between these variables in these three countries. The econometric analysis suggests that any causal relationships within dynamic error correction model for Albania, Bulgaria and Romania cannot be estimated.     

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.     

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.     

Energy consumption,energy R&D and real GDP in OECD countries with and without oil reserves

The objective of the study is to shed light on the contributions of energy consumption and energy R&D on economic growth. We examine two sets of causal relationship between (1) capital stock, energy consumption and real GDP and (2) capital stock, energy R&D and real GDP using panel-based fully-modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) for 20 OECD countries over the period of 1980–2010. Since different countries may respond differently to energy consumption and energy R&D, the sample is further divided into two groups: OECD countries with oil reserves and without oil reserves. Similarly, energy consumption and energy R&D are also further divided into fossil fuel energy and renewable energy. The results show that the role of energy R&D should not be overlooked and fossil fuel R&D is found to drive economic growth more than fossil fuel consumption. The findings also show that while capital stock and fossil fuels are the key factors driving economic growth, renewable energy promotes real output, specifically in the countries without oil reserves.     

Energy consumption,financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis

This paper investigates the asymmetric relationship between energy consumption and economic growth by incorporating financial development, capital and labour into a production function covering the Indian economy from 1960Q₁–2015Q₄. The nonlinear autoregressive distributed lag bounds testing approach is applied to examine the asymmetric cointegration between the variables. An asymmetric causality test is also employed to examine the causal association between the considered variables. The results indicate cointegration between the variables in the presence of asymmetries. The asymmetric causality results show that only negative shocks to energy consumption have impacts on economic growth. In the same vein, only negative shocks to financial development have impacts on economic growth. By contrast, symmetrically, capital formation causes economic growth. Finally, over the study period, a neutral effect exists between the labour force and economic growth in India. The implications of these results for growth policies in India are also discussed.     

The renewable energy,CO2 emissions,and economic growth: VAR model

This paper provides an empirical analysis of CO₂ emissions and economic growth, renewable energy consumption, and energy consumption over the period 1975–2014 in Germany. This paper uses the autoregressive distributed lag (ARDL) approach of cointegration test and vector error-correction models. The unit root and cointegration tests show that the long-run relationship between CO₂ emissions and its determinants. The empirical results show that the findings do not support the environmental Kuznets curve between real GDP and CO₂ emissions. To estimate the shocks of renewable energy consumptions, the study applies the dynamic test of Impulse Response Function (IRF) under the VAR method. The increasing portion of renewable energy consumption in electricity generation would have no impacts on the environment. However, the hikes of renewable energy sources would incur more cost to electricity producers and shrivel up the growth of economies through the expansionary effect of industry’s consumption and private capital spending in the Germany’s economy.     

The long-run and causal analysis of energy,growth, openness and financial development on carbon emissions in Turkey

The aim of this paper is to examine the causal relationship between financial development, trade, economic growth, energy consumption and carbon emissions in Turkey for the 1960–2007 period. The bounds F‐test for cointegration test yields evidence of a long-run relationship between per capita carbon emissions, per capita energy consumption, per capita real income, the square of per capita real income, openness and financial development. The results show that an increase in foreign trade to GDP ratio results an increase in per capita carbon emissions and financial development variable has no significant effect on per capita carbon emissions in the long- run. These results also support the validity of EKC hypothesis in the Turkish economy. It means that the level of CO₂ emissions initially increases with income, until it reaches its stabilization point, then it declines in Turkey. In addition, the paper explores causal relationship between the variables by using error-correction based Granger causality models.