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.     

On the relationships between CO2 emissions,energy consumption and income: The importance of time variation

The environment that governs the relationships between energy consumption, carbon dioxide (CO₂) emissions and gross domestic product (GDP) in the G7 countries changes over time due to variations in economic growth, regulatory policy and technology. Using a novel approach that may detect causalities when the time-constant hypothesis is rejected, we find significant time-varying Granger causalities among the variables under consideration. There is bidirectional causality between GDP and energy consumption for Japan, unidirectional causality running from GDP to energy consumption for Italy, and unidirectional causality running from energy consumption to GDP for the resource country Canada. Moreover, the results also show a bidirectional time-varying causality between energy consumption and CO₂ emissions for the United States, and causality from energy consumption to CO₂ emissions for France. Finally, while we find significant time-varying causalities running from GDP to CO₂ emissions for Italy and Japan, the finding of inverted N-shaped curves (Italy and Japan) lends no support to the traditional Environmental Kuznets Curve (EKC) hypothesis for these countries. It implies that environmental policy and economic growth should go hand in hand. Other policy implications of the empirical results have been proposed.     

The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries

This paper estimates the causal relationships between energy consumption and income for India, Indonesia, the Philippines and Thailand, using cointegration and error-correction modelling techniques. The results indicate that, in the short-run, unidirectional Granger causality runs from energy to income for India and Indonesia, while bidirectional Granger causality runs from energy to income for Thailand and the Philippines. In the case of Thailand and the Philippines, energy, income and prices are mutually causal. The study results do not support the view that energy and income are neutral with respect to each other, with the exception of Indonesia and India where neutrality is observed in the short-run.     

Do urbanization,income, and trade affect electricity consumption across Chinese provinces?

The aim of this paper is to investigate the short- and long-run links among urbanization, output (Gross Domestic Product, GDP), trade openness, and electricity consumption in China, using a rich dataset at the provincial level. The short-run Granger causality analysis discloses a unidirectional causal relationship running from electricity to output and weak feedback effects between trade and urbanization. The long-run Granger causality analysis shows output, urbanization, and trade trigger electricity consumption whereas trade, urbanization, and electricity cause output. The Group Mean and Lambda-Pearson causality tests reveal a large heterogeneity in the long-run effects which suggests there is no “one-size fits all” policy and each region should formulate a differentiated urbanization/growth strategy based on its own characteristics to control electricity utilization.     

The relationship between pollutant emissions,renewable energy,nuclear energy and GDP: empirical evidence from 18 developed and developing countries

This document investigates the causal relationship between nuclear energy (NE), pollutant emissions (CO₂ emissions), gross domestic product (GDP) and renewable energy (RE) using dynamic panel data models for a global panel consisting of 18 countries (developed and developing) covering the 1990–2013 period. Our results indicate that there is a co-integration between variables. The unit root test suggests that all the variables are stationary in first differences. The paper further examines the link using the Granger causality analysis of vector error correction model, which indicates a unidirectional relationship running from GDP per capita to pollutant emissions for the developed and developing countries. However, there is a unidirectional causality from GDP per capita to RE in the short and long run. This finding confirms the conservation hypothesis. Similarly, there is no causality between NE and GDP per capita.     

On the dynamics of aggregate output,electricity consumption and exports in Malaysia: Evidence from multivariate Granger causality tests

This paper employs annual data from 1971 to 2006 to examine the causal relationship between aggregate output, electricity consumption, exports, labor and capital in a multivariate model for Malaysia. We find that there is bidirectional Granger causality running between aggregate output and electricity consumption. The policy implication of this result is that Malaysia should adopt the dual strategy of increasing investment in electricity infrastructure and stepping up electricity conservation policies to reduce unnecessary wastage of electricity, in order to avoid the negative effect of reducing electricity consumption on aggregate output. We also find support for the export-led hypothesis which states Granger causality runs from exports to aggregate output. This result is consistent with Malaysia pursuing a successful export-orientated strategy.     

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,employment and real income in Australia evidence from multivariate Granger causality tests

This paper examines the relationship between electricity consumption, employment and real income in Australia within a cointegration and causality framework. We find that electricity consumption, employment and real income are cointegrated and that in the long-run employment and real income Granger cause electricity consumption, while in the short run there is weak unidirectional Granger causality running from income to electricity consumption and from income to employment.     

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.     

Multivariate Granger causality between electricity generation,exports, prices and GDP in Malaysia

This paper employs annual data for Malaysia from 1970 to 2008 to examine the causal relationship between economic growth, electricity generation, exports and prices in a multivariate model. We find that there is unidirectional Granger causality running from economic growth to electricity generation. However, neither the export-led nor handmaiden theories of trade are supported and there is no causal relationship between prices and economic growth. The policy implication of this result is that electricity conservation policies, including efficiency improvement measures and demand management policies, which are designed to reduce the wastage of electricity and curtail generation can be implemented without having an adverse effect on Malaysia’s economic growth.     

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.     

The long-run and short-run effects of oil price on energy consumption in Tunisia: Evidence from structural breaks analysis

ABSTRACT

Since its revolution in 2010, Tunisia has known a drastic decrease of its GDP reaching the lowest level during the two last decades. In this context, this paper examines the relationship between oil prices, GDP and energy consumption for Tunisia over the 1986–2014 period. The error-correction model (VECM) is employed to investigate the dynamic causality relationships among the variables. In the short run, we find unidirectional causality from oil price and energy consumption to GDP, but this does not indicate unidirectional causality from energy consumption and GDP to oil price. In the long run, our results suggest the existence of a bi-directional Granger causality between oil price, energy consumption, and GDP. We thus propose policy suggestions to solve the energy and sustainable development dilemma in Tunisia, such as encouraging the development of renewable energy, controlling energy consumption through more ambitious programs of energy efficiency and rational use of energy.     

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 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.     

CO2 emissions,nuclear energy,renewable energy and economic growth in the US

This study explores the causal relationship between carbon dioxide (CO₂) emissions, renewable and nuclear energy consumption and real GDP for the US for the period 1960–2007. Using a modified version of the Granger causality test, we found a unidirectional causality running from nuclear energy consumption to CO₂ emissions without feedback but no causality running from renewable energy to CO₂ emissions. The econometric evidence seems to suggest that nuclear energy consumption can help to mitigate CO₂ emissions, but so far, renewable energy consumption has not reached a level where it can make a significant contribution to emissions reduction.     

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.     

Dynamic relationship between CO2 emissions,energy consumption and economic growth in three North African countries

This paper investigated the causal relationship between energy consumption (EC), carbon dioxide (CO₂) emissions and economic growth for three selected North African countries. It uses a panel co-integration analysis to determine this econometric relationship using data during 1980–2012. Recently developed tests for panel unit root and co-integration tests are applied. In order to test the Granger causality, a panel Vector Error Correction Model is used. The conservation hypothesis is found; the short run panel results show that there is a unidirectional relationship from economic growth to EC. In addition, there is a unidirectional causality running from economic growth to CO₂ emissions. A unidirectional relationship from EC to CO₂ emissions is detected. Findings shown that there is a big interdependence between EC and economic growth in the long run, which indicates the level of economic activity and EC mutually influence each other in that a high level of economic growth leads to a high level of EC and vice versa. Similarly, a unidirectional causal relationship from EC to CO₂ emissions is detected. This study opens up new insights for policy-makers to design comprehensive economic, energy and environmental policy to keep the economic green and a sustainable environment, implying that these three variables could play an important role in the adjustment process as the system changes from the long run equilibrium.     

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.     

Economic growth and electricity consumption in Cote d'Ivoire: Evidence from time series analysis

This paper examines the causal relationship between the electric power industry and the economic growth of Cote d'Ivoire. Using the data from 1971 to 2008, a test was conducted for the cointegration and Granger causality within an error correction model. Results from these tests reveal a bidirectional causality between per capita electricity consumption and per capita GDP. A unidirectional causality running from electricity consumption to industry value added appears in the short run. Economic growth is found to have great effects on electricity consumption and a reverse causality from electricity to economic growth may also appear. In the long run, there is a unidirectional causality between electricity and both GDP and industry value added. From these findings, we conclude that the country will be energy dependent in the long run and must therefore secure the production network from shortfalls to ensure a sustainable development path. Accordingly, government should adopt policies aimed at increasing the investment in the sector by stepping up electricity production from existing and new energy sources.