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.     

The causality between energy consumption and economic growth in Turkey

This paper applies the causality test to examine the causal relationship between primary energy consumption (EC) and real Gross National Product (GNP) for Turkey during 1970–2006. We employ unit root tests, the augmented Dickey–Fuller (ADF) and the Philips–Perron (PP), Johansen cointegration test, and Pair-wise Granger causality test to examine relation between EC and GNP. Our empirical results indicate that the two series are found to be non-stationary. However, first differences of these series lead to stationarity. Further, the results indicate that EC and GNP are cointegrated and there is bidirectional causality running from EC to GNP and vice versa. This means that an increase in EC directly affects economic growth and that economic growth also stimulates further EC. This bidirectional causality relationship between EC and GNP determined for Turkey at 1970–2006 period is in accordance with the ones in literature reported for similar countries. Consequently, we conclude that energy is a limiting factor to economic growth in Turkey and, hence, shocks to energy supply will have a negative impact on economic growth.     

Energy consumption and economic growth nexus in Tanzania: An ARDL bounds testing approach

In this paper, we examine the intertemporal causal relationship between energy consumption and economic growth in Tanzania during the period of 1971–2006. Unlike the majority of the previous studies, we employ the newly developed autoregressive distributed lag (ARDL)-bounds testing approach by Pesaran et al. [2001. Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics 16, 289–326] to examine this linkage. We also use two proxies of energy consumption, namely total energy consumption per capita and electricity consumption per capita. The results of the bounds test show that there is a stable long-run relationship between each of the proxies of energy consumption and economic growth. The results of the causality test, on the other hand, show that there is a unidirectional causal flow from total energy consumption to economic growth and a prima-facie causal flow from electricity consumption to economic growth. Overall, the study finds that energy consumption spurs economic growth in Tanzania.     

The relationship between energy and economic growth: Empirical evidence from 66 countries

In this study, we use dynamic panel data models to examine the impact of electricity and non-electricity variables on economic growth for a global panel consisting of 66 countries. The time component of our dataset is 1986–2005 inclusive. We also estimate this relationship for four regional panels; namely, East/South Asian and the Pacific region, Europe and Central Asian region, Latin America and Caribbean region, and Sub-Saharan, North Africa and Middle Eastern region. In total, we use six proxies for energy. The empirical analysis is based on a sound theoretical framework, in that we draw on growth theory and augment the classical growth model, which consists of inflation, capital stock, labour force and trade, with energy. Generally, the results on the impact of energy are mixed.     

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.     

The relation between Chinese economic development and energy consumption in the different periods

Since the 1980s, Chinese economy grew rapidly. With the rapid economic growth, Chinese energy consumption sharply increased. The relation between Chinese energy consumption and economic growth is focused on, and many researchers have studied this issue by applying the methods such as granger causality test. However, the results just reveal the relation in a very long period. In this paper, the history of Chinese economy is divided into four periods. And the relation between Chinese energy consumption and economic growth is examined by applying grey incidence analysis, which is one of the most important methods of grey system theory which can be applied to solve the problems with small samples. The results show that the relations in different periods are not the same. The degree of grey incidences between total energy consumption and values added of secondary industry is larger, and the degree of grey incidences between GDP and consumption of coal is larger too. And the policy implications of these results are explained.     

The impact of energy consumption on economic growth: Evidence from linear and nonlinear models in Taiwan

This paper considers the possibility of both a linear effect and nonlinear effect of energy consumption on economic growth, using data for the period 1955–2003 in Taiwan. We find evidence of a level-dependent effect between the two variables. Allowing for a nonlinear effect of energy consumption growth sheds new light on the explanation of the characteristics of the energy-growth link. We also provide evidence that the relationship between energy consumption and economic growth in Taiwan is characterized by an inverse U-shape. Some previous studies support the view that energy consumption may promote economic growth. However, the conclusion drawn from the empirical findings suggests that such a relationship exists only where there is a low level of energy consumption in Taiwan. We show that a threshold regression provides a better empirical model than the standard linear model and that policy-makers should seek to capture economic structures associated with different stages of economic growth. It is also worth noting that the energy consumption threshold was reached in the case of Taiwan in the world energy crises periods of 1979 and 1982.     

Causal relationship between nuclear energy consumption and economic growth: A multi-country analysis

This paper attempts to investigate the causal relationship between nuclear energy consumption and economic growth using the data from six countries among 20 countries that have used nuclear energy for more than 20 years until 2005. To this end, time-series techniques including the tests for unit roots, co-integration, and Granger-causality are employed to Argentina, France, Germany, Korea, Pakistan, and Switzerland. The main conclusion is that the causal relationship between nuclear energy consumption and economic growth is not uniform across countries. In the case of Switzerland, there exists bi-directional causality between nuclear energy consumption and economic growth. This means that an increase in nuclear energy consumption directly affects economic growth and that economic growth also stimulates further nuclear energy consumption. The uni-directional causality runs from economic growth to nuclear energy consumption without any feedback effects in France and Pakistan, and from nuclear energy to economic growth in Korea. However, any causality between nuclear energy consumption and economic growth in Argentina and Germany is not detected.     

Energy consumption and economic growth revisited in African countries

The aim of this paper is to provide new empirical evidence on the relationship between energy consumption and economic growth for 21 African countries over the period from 1970 to 2006, using recently developed panel cointegration and causality tests. The countries are divided into two groups: net energy importers and net energy exporters. It is found that there exists a long-run equilibrium relationship between energy consumption, real GDP, prices, labor and capital for each group of countries as well as for the whole set of countries. This result is robust to possible cross-country dependence and still holds when allowing for multiple endogenous structural breaks, which can differ among countries. Furthermore, we find that decreasing energy consumption decreases growth and vice versa, and that increasing energy consumption increases growth, and vice versa, and that this applies for both energy exporters and importers. Finally, there is a marked difference in the cointegration relationship when country groups are considered.     

Energy consumption and economic growth in Turkey during the past two decades

The Turkish economy has undergone a transformation from agricultural to industrial, enhanced by rapid urbanization, especially after 1982. Turkey's gross national production has grown at an average annual rate of 5% since 1983, ranking it at the top of the OECD countries, although the growth pattern has been uneven. Economic growth in recent years has been associated with the privatization of public enterprises. Turkey's energy demand has risen rapidly as a result of social and economic development. The country's energy consumption has grown considerably since the beginning of the 1980s. The Turkish government encourages foreign and Turkish private sector investors to implement the energy projects and is currently working on a new investment model for the construction of new generation plants to create the additional capacity needed. The Turkish energy sector, with its current size of 30 billion US dollars and projected size of 55 billion US dollars by 2015, as well as the fundamental restructuring process it has been going through since 2001, attracts both local and foreign investors. The sector needs an investment amount of approximately 130 billion US dollars by 2020. The aim of the present paper is to investigate the increasing of Turkish energy demand with the growth of the economy and utilization of domestic energy sources and the case of investments and imports in Turkey during the past two decades.     

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 relationship between energy consumption structure,economic structure and energy intensity in China

This paper investigates the long-run equilibrium relationships, temporal dynamic relationships and causal relationships between energy consumption structure, economic structure and energy intensity in China. Time series variables over the periods from 1980 to 2006 are employed in empirical tests. Cointegration tests suggest that these three variables tend to move together in the long-run. In addition, Granger causality tests indicate that there is a unidirectional causality running from energy intensity to economic structure but not vice versa. Impulse response analysis provides reasonable evidences that one shock of the three variables will cause the periods of destabilized that followed. However, the impact of the energy consumption structure shock on energy intensity and the impact of the economic structure shock on energy consumption structure seem to be rather marginal. The findings have significant implications from the point of view of energy conservation and economic development. In order to decrease energy intensity, Chinese government must continue to reduce the proportion of coal in energy consumption, increase the utilization efficiency of coal and promote the upgrade of economic structure. Furthermore, a full analysis of factors that may relate to energy intensity (e.g. energy consumption structure, economic structure) should be conducted before making energy policies.     

Evidence of causality between the quantity and quality of energy consumption and economic growth

The aim of this paper is to re-examine the energy–GDP relationship for the US for the period 1946–2000 by redefining energy in terms of exergy (the amount of energy available for useful work) and the amount of useful work provided from energy inputs. This enables us to examine whether output growth depends on either the quantity of energy supplied and/or the efficiency of energy use. Two multivariate models were estimated involving GDP, capital, labour and the two measures of energy. We find that unidirectional causality runs from either energy measure to GDP. We attribute the causation to both short- and long-run effects in the case of exergy, but only long-run effects in the case of useful work. We find no evidence of causality running from GDP to either energy measure. We infer that output growth does not drive increased energy consumption and to sustain long-term growth it is necessary to either increase energy supplies or increase the efficiency of energy usage. Faced with energy security concerns and the negative externalities of fossil fuel use the latter option is preferred.     

CO2 emissions,energy consumption and economic growth in China: A panel data analysis

This paper examines the causal relationships between carbon dioxide emissions, energy consumption and real economic output using panel cointegration and panel vector error correction modeling techniques based on the panel data for 28 provinces in China over the period 1995–2007. Our empirical results show that CO₂ emissions, energy consumption and economic growth have appeared to be cointegrated. Moreover, there exists bidirectional causality between CO₂ emissions and energy consumption, and also between energy consumption and economic growth. It has also been found that energy consumption and economic growth are the long-run causes for CO₂ emissions and CO₂ emissions and economic growth are the long-run causes for energy consumption. The results indicate that China's CO₂ emissions will not decrease in a long period of time and reducing CO₂ emissions may handicap China's economic growth to some degree. Some policy implications of the empirical results have finally been proposed.     

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.     

Carbon emissions,energy consumption and economic growth: An aggregate and disaggregate analysis of the Indian economy

This study investigates the long and short run relationships among carbon emissions, energy consumption and economic growth in India at the aggregated and disaggregated levels during 1971–2014. The autoregressive distributed lag model is employed for the cointegration analyses and the vector error correction model is applied to determine the direction of causality between variables. Results show that a long run cointegration relationship exists and that the environmental Kuznets curve is validated at the aggregated and disaggregated levels. Furthermore, energy (total energy, gas, oil, electricity and coal) consumption has a positive relationship with carbon emissions and a feedback effect exists between economic growth and carbon emissions. Thus, energy-efficient technologies should be used in domestic production to mitigate carbon emissions at the aggregated and disaggregated levels. The present study provides policy makers with new directions in drafting comprehensive policies with lasting impacts on the economy, energy consumption and environment towards sustainable development.     

Energy consumption,economic growth and prices: A reassessment using panel VECM for developed and developing countries

This paper reinvestigates the energy consumption–GDP growth nexus in a panel error correction model using data on 20 net energy importers and exporters from 1971 to 2002. Among the energy exporters, there was bidirectional causality between economic growth and energy consumption in the developed countries in both the short and long run, while in the developing countries energy consumption stimulates growth only in the short run. The former result is also found for energy importers and the latter result exists only for the developed countries within this category. In addition, compared to the developing countries, the developed countries’ elasticity response in terms of economic growth from an increase in energy consumption is larger although its income elasticity is lower and less than unitary. Lastly, the implications for energy policy calling for a more holistic approach are discussed.     

Linear and nonlinear causality between sectoral electricity consumption and economic growth: Evidence from Taiwan

This study investigates the linear and nonlinear causality between the total electricity consumption (TEC) and real gross domestic production (RGDP). Unlike previous literature, we solve the undetermined relation between RGDP and electricity consumption by classifying TEC into industrial sector consumption (ISC) and residential sector consumption (RSC) as well as investigating how TEC, ISC, and RSC influence Taiwan's RGDP. By using the Granger's linear causality test, it is shown that (i) there is a bidirectional causality among TEC, ISC, and RGDP, but a neutrality between RSC and RGDP with regard to the linear causality and (ii) there is still a bidirectional causality between TEC and RGDP, but a unidirectional causality between RSC and RGDP with regard to the nonlinear causality. On the basis of (i) and (ii), we suggest that the electricity policy formulators loosen the restriction on ISC and limit RSC in order to achieve the goal of economic growth.     

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.