A multivariate causality test of carbon dioxide emissions,energy consumption and economic growth in China

This paper uses multivariate co-integration Granger causality tests to investigate the correlations between carbon dioxide emissions, energy consumption and economic growth in China. Some researchers have argued that the adoption of a reduction in carbon dioxide emissions and energy consumption as a long term policy goal will result in a closed-form relationship, to the detriment of the economy. Therefore, a perspective that can make allowances for the fact that the exclusive pursuit of economic growth will increase energy consumption and CO₂ emissions is required; to the extent that such growth will have adverse effects with regard to global climate change.     

Energy consumption and economic growth for selected OECD countries: Further evidence from the Granger causality test in the frequency domain

This paper aims to reexamine the causal relationship between energy consumption and economic growth for 20 OECD countries. To that end, we employ a Granger causality test in the frequency domain which allows us to distinguish short (temporary) and long-run (permanent) causality. The empirical results could be summarized as following. First, in terms of causality running from GDP to energy consumption, there is a temporary relationship for Australia, Austria, Canada, Italy, Japan, Mexico, the Netherlands, Portugal, the UK, the USA, and a permanent relationship for Austria, Belgium, Denmark, Germany, Italy, Japan, the Netherlands, Norway, and the USA. Second, in terms of causality running from energy consumption to GDP, there is a temporary relationship for Austria, Denmark, Italy, the Netherlands, Norway and Portugal, and a permanent relationship for Belgium, Finland, Greece, Italy, Japan, and Portugal. The main implication of our finding is that the energy policies should take into consideration not only the causality direction between economic growth and energy consumption but also whether it is temporal or permanent and furthermore authorities must design policy actions accordingly.     

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 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: 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 in South Africa: A trivariate causality test

In this paper we examine the causal relationship between electricity consumption and economic growth in South Africa. We incorporate the employment rate as an intermittent variable in the bivariate model between electricity consumption and economic growth—thereby creating a simple trivariate causality framework. Our empirical results show that there is a distinct bidirectional causality between electricity consumption and economic growth in South Africa. In addition, the results show that employment in South Africa Granger-causes economic growth. The results apply irrespective of whether the causality is estimated in the short-run or in the long-run formulation. The study, therefore, recommends that policies geared towards the expansion of the electricity infrastructure should be intensified in South Africa in order to cope with the increasing demand exerted by the country's strong economic growth and rapid industrialisation programme. This will certainly enable the country to avoid unprecedented power outages similar to those experienced in the country in mid-January 2008.     

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 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.     

Clean energy consumption and economic growth nexus: asymmetric time and frequency domain causality testing in China

ABSTRACT

This article examines the symmetric and asymmetric causal relationships between clean energy consumption and economic growth in time and frequency domains for China. The results of both symmetric and asymmetric causality analysis suggest that clean energy consumption does not cause economic growth. This implies that the level of clean energy consumption in China seems to be optimal and beyond this level, it does not affect the growth level of the country. However, examination of the causality linkage from economic growth to clean energy consumption indicates medium and long-run evidence of a frequency-based symmetric causal relationship. Our asymmetric analysis makes this relation clearer such that only the adverse shocks to economic growth lead to a decline in the clean energy consumption level. This inference is complemented with the estimated causal parameter of 0.13, indicating that a 1% decrease in economic growth results in a 0.13% reduction in the level of clean energy consumption.     

Energy consumption and economic growth: The case of oil exporting countries

This paper examines the causal relationship between the per capita energy consumption and the per capita GDP in a panel of 11 selected oil exporting countries by using panel unit-root tests and panel cointegration analysis. The results show a unidirectional strong causality from economic growth to energy consumption for the oil exporting countries. The findings have practical policy implications for decision makers in the area of macroeconomic planning. In most major oil exporting countries, government policies keep domestic prices bellow free market level, resulting in high levels of domestic energy consumption. The results imply that the energy conservation through reforming energy price policies has no damaging repercussions on economic growth for this group of countries.     

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.     

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.     

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.     

Renewable energy consumption and economic growth in newly industrialized countries: Evidence from asymmetric causality test

In this study, the relationship between renewable energy consumption and economic growth in newly industrialized countries is examined for the period from 1971 to 2011. In previous studies, the causal relationship between variables was performed by the validity of the assumption of positive shocks. This study employs the asymmetric causality approach to investigate the relationship between positive and negative shocks of variables. The results reveal that negative shocks in renewable energy consumption causes positive shocks in real GDP for South Africa and Mexico; negative shocks in renewable energy consumption causes negative shocks in real GDP for India. In addition, the neutrality hypothesis is confirmed for Brazil and Malaysia.     

Energy consumption and economic activities in Iran

The causal relationship between overall GDP, industrial and agricultural value added and consumption of different kinds of energy are investigated using vector error correction model for the case of Iran within 1967–2003. A long-run unidirectional relationship from GDP to total energy and bidirectional relationship between GDP and gas as well as GDP and petroleum products consumption for the whole economy was discovered. Causality is running from value added to total energy, electricity, gas and petroleum products consumption and from gas consumption to value added in industrial sector. The long-run bidirectional relations hold between value added and total energy, electricity and petroleum products consumption in the agricultural sector. The short-run causality runs from GDP to total energy and petroleum products consumption, and also industrial value added to total energy and petroleum products consumption in this sector.     

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.     

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.     

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.     

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.     

Energy consumption and economic growth in the light of meeting the targets of energy policy in the EU: The bootstrap panel Granger causality approach

The aim of the paper is to assess linkages between energy consumption and economic growth in the light of compliance with the EU energy policy targets stated in the climate and energy package for 2020 in the European Union member states in the period 1993–2011. The study is divided into two main stages. During the first one, using cluster analysis methods, four groups of countries which met three energy policy targets stated in the package at similar levels were identified. During the second stage, the bootstrap Granger panel causality approach proposed by Kònya (2006) was used to verify the hypothesis of causality between energy consumption and economic growth in the countries from four groups created in the previous step. The global financial crisis was also taken into account. The results obtained reveal that the level of compliance with energy policy targets influences linkages between energy consumption and economic growth. The results indicate causal relations in the group of countries with the greatest reduction of greenhouse gas emissions, the highest reduction of energy intensity and the highest share of renewable energy consumption in total energy consumption. In the remaining groups the results mostly confirm the neutrality hypothesis.