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Energy Consumption and Economic Growth Revisited: Structural Breaks and Cross-Section Dependence
Abstract
This paper examines the causal relationship between real GDP and energy consumption for 23 OECD countries from 1971 to 2009. Using recently developed panel econometric techniques the present paper takes into account structural breaks and cross-section dependence when analyzing the energy consumption-growth nexus. The empirical results of this study indicate that there exists a long-run equilibrium relationship between real GDP and energy consumption, and the impact of real GDP on energy consumption is larger than vice versa. Furthermore, the empirical evidence of a dynamic panel error-correction model reveals a bidirectional causal relationship between economic growth and energy consumption in both the short and long run.
... Such methodical shortcomings are characteristic of most of the considered panel data papers. The only exceptions are studies by Narayan and Smyth (2008) Dong et al. (2020), Shahbaz et al. (2020), Adedoyin et al. (2021) and Dobnik (2011). The first eleven studies take into account contemporaneous correlation and structural changes, but only in some cases (unit root testing or cointegration testing or models estimation). ...
... However, this study (Dobnik, 2011) also suffers from serious methodical shortcomings that can be summarized in the following: (1) the author has suspected and estimated the reverse causality cointegrating equations, using Pesaran's (2006) CCE techniques, which by definition violates assumption of the strictly exogenous regressors and implies inconsistent estimates of the cointegrating vector, (2) cointegration was tested using only one econometric test that incorporate contemporaneous correlation and structural changes (Westerlund & Edgerton, 2008), which is problematic because it requires strictly or weakly exogenous regressors and stationary common factors, (3) in the case of non-stationary factors, the cointegration between dependent and independent variables is neither necessary, nor sufficient to provide consistent parameters estimates (it is necessary to have cointegration between the regressand, regressors and non-stationary unobservable common factors), (4) the author tested the Granger non-causality using the PMG estimator (Pesaran et al., 1999) that means at the level of the first differences. ...
... & Payne, 2012;Belke et al., 2011;Dobnik, 2011;Kahsai et al., 2012; Niu et al., 2011 (for 4 developed Asia-Pacific countries); Kouton, 2019 (in asymmetric sense);Mensah et al., 2019;Cerović Smolović et al., 2020;Dong et al., 2020; Shahbaz et al., 2020 (renewable Content courtesy of Springer Nature, terms of use apply. Rights reserved.P. Petrović ...
This paper examines the nature of the economic activity–energy use nexus for 82 countries and the period from 1971 to 2014. Compared to all other papers, the current study is based on a significantly larger number of observations and was carried out by using new and advanced non-stationary panel data econometric techniques that overcame most of the existing methodical failures. The findings of the Granger non-causality test quite robustly lead to the conclusion that there is bi-directional causality both in the short and the long run. Finally, the obtained estimation results suggest that the increase of energy consumption by 1% results in an increase of GDP per capita between 0.54 and 0.56%. Also, the increase of GDP by 1% results in an increase in energy consumption between 0.47 and 0.48%. Governments cannot simply apply energy conservation policy by reducing total consumption of fossil fuels without negatively affecting economic activity and generating of spiral of mutual effects with positive ecological and very negative economic consequences. It is therefore necessary to make significant efforts to modernize the energy sector and to stimulate companies to invest in new energy-efficient production technologies relying on alternative environmentally friendly energy sources.
... The PMG standing is in between Mean Group (MG) which allows slopes and coefficients to differ across individuals and the Fixed Effect Method (FEM) in which slopes remain fixed while intercept can vary across countries (Shahbaz et al., 2017). The PMG does not rely on the less plausible assumption, while analysing the long-run homogeneity, of individual short-run identical dynamics (Frauke, 2011). The PMG combines pooling and averaging of coefficients as compare to estimators in which the country specific regression coefficients are averaged leading to consistent yet not good estimates especially when any of the dimensions (N or T) of data set is small (Hsiao et al., 1999). ...
... The PANIC procedure proposed by Bai and Ng (2004) and modified by Bai and Carrion-i-Silvestre (2009) can robustly achieve decomposition, in the presence of structural break, into common and idiosyncratic components. In brief, their overall approach has the following steps: 1) for each time series estimate the number and place of structural breaks; 2) use iteration procedure to estimate common factors, factor loadings and changes magnitude; 3) to estimate residuals, based on estimated quantities in step 2, for each time series; 4) for each residual series, determine the modified univariate MSB test; 5) by pooling the individual ones, devise the panel MSB test (Frauke, 2011). Bai and Carrion-i-Silvestre (2009) suggest the following two models in respect of deterministic component D i, t . ...
... To test the cross-sectional dependence (CD), this study applies the test developed by Pesaran (2004) that is appropriate for the dynamic heterogeneous panels with a structural break (Khan and Husnain, 2019;Frauke, 2011). The null hypothesis of zero dependence across the panel unit is tested. ...
The environmental Kuznets curve (EKC) establishes a hypothetical link between economic growth and environmental degradation and has been tested empirically using various measures of pollution, including carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) emissions. However, few studies have focused on N2O emissions, despite their projected lifetime of 114 years and 300 times greater warming potential than CO2. Employing panel data for the period 1980 to 2012, this study uses the EKC to investigate N2O emissions, including those resulting from agriculture, economic growth, agricultural land use, and exports. Two groups of data are extracted from the panel data: the first group contains the top 15 countries, ranked by N2O emissions, measured in thousand metric tons of CO2, while the second group contains the top 18 countries, ranked by share of agriculture in GDP. A pooled mean group approach developed by Pesaran et al. (1999) is used to determine whether long-run relationships exist between the variables after determined by the Hausman test. The results show that N2O emissions and economic growth are co-integrated in both panels, providing evidence in favour of the EKC. In addition, agricultural land use has a positive and significant effect on N2O emissions. That is, if countries wish to reduce their N2O emissions or agricultural N2O emissions, they should optimize or reduce the use of agricultural land.
... where I is the cross-sectional identities, t is the time period, and X it is a (k*1) vector of the regressors. The αi (intercept) and βi (the slope coefficient) can differ across the cross-section members (Dobnik 2011;. The test statistic is given as where it represents the evaluation of the residual pairwise correlation of OLS and ̂ it is related to the given equation: ...
... where pi, i (1 to N) represent the individual p value. Bai and Carrion-i-Silvestre (2009) represent the corresponding P and P m as P * and P * m, respectively (Dobnik, 2011). ...
Environmental issues have gained the attention of regulators and researchers worldwide. This present study empirically examines the validation of the environmental Kuznets curve (EKC) in the selected ASEAN economies for the period 1995-2018 in the presence of eco-innovations and tourism. This study assesses the short-run and long-run relationship between carbon dioxide emission, tourism, eco-innovations, and economic growth in ASEAN countries. To fulfil the objectives of the study, Westerlund and Edgerton (Oxf Bull Econ Stat 70:665-704, 2008) and Banerjee and Carrion-i-Silvestre (J Time Ser Anal 38:610-636, 2017) co-integration analysis have been applied to estimate the co-integration among variables because cross-sectional dependence (CSD) and slope heterogeneity was present. The short-run and the long-run empirical estimation have been done through cross-sectional auto distributive lag model. The findings provide evidence that an inverted U-shape nexus exists between carbon (CO2) emissions and economic growth in the ASEAN countries, a validation of EKC. Eco-innovations and tourism are found to be the factors that mitigate CO2 emissions. AMG and CCEMG results also confirm the robustness of short-run and long-run results. The findings of the study suggest that governments in ASEAN countries should promote tourism and eco-innovations (i.e., research and development) to mitigate CO2 emission, which poses serious threats to environmental sustainability. Also, tourism and eco-innovations are the drivers of economic growth, and growth reconciles with environmental sustainability in the selected ASEAN countries. This study provides guidelines to the policymakers while formulating the regulations related to environmental degradation.
... where I is the cross-sectional identities, t is the time period, and X it is a (k*1) vector of the regressors. The αi (intercept) and βi (the slope coefficient) can differ across the cross-section members (Dobnik 2011;. The test statistic is given as where it represents the evaluation of the residual pairwise correlation of OLS and ̂ it is related to the given equation: ...
... where pi, i (1 to N) represent the individual p value. Bai and Carrion-i-Silvestre (2009) represent the corresponding P and P m as P * and P * m, respectively (Dobnik, 2011). ...
Environmental issues have gained the attention of regulators and researchers worldwide. This present study empirically examines the validation of the environmental Kuznets curve (EKC) in the selected ASEAN economies for the period 1995–2018 in the presence of eco-innovations and tourism. This study assesses the short-run and long-run relationship between carbon dioxide emission, tourism, eco-innovations, and economic growth in ASEAN countries. To fulfil the objectives of the study, Westerlund and Edgerton (Oxf Bull Econ Stat 70:665-704, 2008) and Banerjee and Carrion‐i‐Silvestre (J Time Ser Anal 38:610-636, 2017) co-integration analysis have been applied to estimate the co-integration among variables because cross-sectional dependence (CSD) and slope heterogeneity was present. The short-run and the long-run empirical estimation have been done through cross-sectional auto distributive lag model. The findings provide evidence that an inverted U-shape nexus exists between carbon (CO2) emissions and economic growth in the ASEAN countries, a validation of EKC. Eco-innovations and tourism are found to be the factors that mitigate CO2 emissions. AMG and CCEMG results also confirm the robustness of short-run and long-run results. The findings of the study suggest that governments in ASEAN countries should promote tourism and eco-innovations (i.e., research and development) to mitigate CO2 emission, which poses serious threats to environmental sustainability. Also, tourism and eco-innovations are the drivers of economic growth, and growth reconciles with environmental sustainability in the selected ASEAN countries. This study provides guidelines to the policymakers while formulating the regulations related to environmental degradation.
... As Dobnik [17] underlines, the outcome of the causality analysis in this field has four implications. The first implication is connected to the growth hypothesis that considers energy consumption as a key element for growth. ...
... The outcome is in line with the feedback hypothesis [17] in which energy consumption and GDP affect each other simultaneously. Accordingly, our findings suggest that policy makers should foster regulations to reduce energy use in Italy. ...
... Kraft et al. (1978) for USA, Öncel, Kırca and İnal (2017) for OECD countries discovered a unidirectional connection from EG to EC in their analysis. According to Belke et al. (2010) and Dobnik (2011) for OECD countries, Yıldırım, Yıldırım and Demirtaş (2019) found bidirectional causality between EC and GDP in their analysis for BRIC-T countries. Ahmed et al. (2016) found one-way causality from EC to EG in 25 countries, one-way causality from EG to EC in 40 countries, bidirectional causality between EC and EG in 18 countries, and no causality in 36 countries. ...
The aim of this study is to explain the impact of shocks in foreign direct investments and per capita energy consumption on real growth shocks in Türkiye between 1970 and 2015. For this purpose, it is planned to evaluate the temporary and permanent effects of the variables on economic growth. To the cointegrated relationship between the variables the Fourier-Shin cointegration test; to determine the stationarity, Augmented Dickey Fuller- Becker, Enders and Lee Fourier KPSS stationarity tests were used. The long-run and short-run coefficients were estimated using the dynamic least squares method (DOLS). According to the findings of the analysis, in the long run, a 1% increase in energy consumption increases economic growth by 0.04%, while a 1% increase in foreign direct investment increases economic growth by 1.6%. In the short run, a 1% increase in FDI increases economic growth by 0.7%. FDI plays a key role for Türkiye's economic growth both in the long and short run. On the other hand, Türkiye needs more permanent energy policies that will cover the long-term rather than short-term energy policies.
... i and i are the country-specific intercept and slope coefficients before the break; i and i show the change in these parameters after the break. The disturbance term z it is formed by Eqs. 9, 10, and 11 that considers CSD through UCF (Dobnik 2011). where i (L) ∶= 1 − Σ P i j=1 ij L j is a scalar polynomial in the lag operator L, F t is an r-dimensional vector of UCF F jt with j = 1, …, r and i is a conformable vector of loading parameters. ...
While aiming for economic growth, environmental pollution is often ignored. Obtaining energy demand, one of the most critical factors for economic growth, from clean energy sources supports green growth. Policymakers attach importance to environmental policies to achieve green growth. On the one hand, high taxes are applied to polluting resources; on the other hand, subsidies are given to clean energy resources, and tax exemptions are applied. This study examines the effects of economic growth, environmental policy stringency, and renewable energy consumption on environmental sustainability in eight high-income countries from 1990 to 2020. In this study, a robust econometric methodology was applied. The study utilized the cointegration tests of Westerlund (Westerlund, Oxford Bull Econ Stat 69:709–748, 2007) and Westerlund and Edgerton (Westerlund and Edgerton, Oxford Bull Econ Stat 70:665–704, 2008). Long-term parameter estimates were obtained using the AMG and CCE estimators. Finally, the causality analysis was performed using the Emirmahmutoglu and Kose (Emirmahmutoglu and Kose, Econ Model 28:870–876, 2011) test. According to the study results, economic growth reduces environmental quality in all other countries and panel except Sweden. While renewable energy consumption increases environmental quality in the UK, it reduces it in China. In Denmark and South Korea, environmental policy stringency improves environmental quality. According to the causality results, there is a unidirectional causality from economic growth to environmental quality in China, Japan, South Africa, Sweden, and the UK, and from renewable energy to environmental quality in Japan and South Africa. Policy interventions to decouple economic growth from environmental degradation are imperative. In this context, encouraging renewable energy investments through subsidies and tax incentives may be effective.
Graphical abstract
... The first generation of panel time-series estimation (FMOLS and DOLS) progressed to the second generation of panel time-series estimation (DCCE and AMG). Furthermore, as indicated by Dobnik (2011), the consideration of structural break is strongly advisable during an economic recession or financial crisis. Therefore, the present study will take into account structural breaks during the COVID-19 pandemic period. ...
This paper investigates the dynamic responses of stock return of container shipping companies to the global container freight indices during the Coronavirus pandemic period. The new econometric approach Dynamic Common Correlated Effects (DCCE) has been used to measure cointegrating relations among cross-sectional units. This procedure provides significant robust outcomes in the presence of cross-sectional dependence. A statistically significant and positive result has been observed between stock returns and container freight indices. The newly developed tests for a structural break were also implemented for our macro panel data. Our results are robust to structural break under different measures of container freight indices.
... Therefore, a new most sophisticated third generation URT is employed that not only considers structural breaks but also heterogeneity in the slope and CD in the panel data Bai and Carrion-i-silvestre, (2009). Since, in the previous empirical studies aforementioned econometric techniques yet rarely employed to investigate the energy consumption-growth relationship (Dobnik, 2012). Hence, in the present work, we are going to use Bai and Carrion-i-silvestre, (2009) developed 3rd generation URT to examine the problems related to non-stationarity with CD. ...
This study probes the sustainable development path for ASEAN countries throughout 1990-2019. In doing so, we estimated two equations with the dependent variable of Gross domestic product (GDP) and CO 2 emissions, respectively. We took independent variables of capital formation CAP, labor productivity LAB, financial inclusion FIN, globalization GLO, per capita income PI, private-public partnership, and population growth POP. The findings reveal that there exists a strong association between the estimated equations. The coefficient values obtained from cross-sectional ARDL show that CAP, LAB, FIN, GLO, and PI are increasing GDP in ASEAN countries. At the same time, POP, PI, and GLO are contributing toward more CO 2 emissions in ASEAN countries. It was observed that FIN is reducing CO 2 emissions significantly. To attain a sustainable expansion economy, these developing countries need to revise their economic and environmental policies. PI and POP are positively correlated with CO 2 emissions, which means that these countries are even consuming non-renewable energy in the economic sector. Moreover, POP is also contributing factor to environmental pollution. There is a need to increase public awareness about climatic problems.
... Kapetanios et al. (2011) extend the work of Pesaran (2006) to the case where the unobserved common factors are nonstationary. They show that the CCE estimators are consistent even in the presence of unit roots in the unobserved common factors and are also robust to structural breaks in the mean of those unobserved factors (Dobnik, 2011 ...
Political risk and economic policy uncertainty have an impact on many macroeconomic variables in the economy. One of the most crucial of these variables are foreign direct investment. Foreign investors refrain from investing in the economies of high policy uncertainty and direct their investment to the economies where there is political stability and no uncertainty in the economy. This study attempted an econometric model to illustrate the long-run relationships among political risk, economic policy uncertainty and foreign direct investment inflows of five EU countries during the period 2001-2014. Westerlund and Edgerton (2007)'s panel LM bootstrap panel cointegration test is applied to discover empirical support for the presence of the cointegration relationship between the variables. Finally, the cointegration coefficients are estimated by using the Pesaran (2006)'s CCE estimator. The empirical findings show positive coefficients for political stability in Germany, France, England and Spain while statistically significant and negative coefficients for economic policy uncertainty in France and Spain. In addition, the variable of economic freedom has statistically significant and positive effect on foreign direct investments for only England and the openness of trade variable has statistically significant and positive effect on it for Spain and Italy.
... The study found that economic growth and energy consumption has bi-directional causality in most of the European countries. Belke et al. (2011) and Dobnik (2011) examined the relationship between energy consumption and economic growth of OECD countries for the period of 1981-2007 and 1971-2009 respectively. Both studies found that economic growth and energy consumption has bi-directional causality. ...
This paper examines the causal relationship between energy consumption and real GDP of the fourteen MENA Countries over the period 1987–2019 by using bivariate Vector Auto-regression model and Granger causality approach. This study shows the existence of unidirectional, bidirectional or no causal relationship between energy consumption and economic growth of different countries in MENA Region. The study also suggests the environmental and energy policies should recognize the relationship between energy consumption and economic growth in order to maintain sustainable economic growth in MENA region.Keywords: Energy consumption, Economic growth, Causality, Cointegration,JEL Classifications: C3, O4, Q43DOI: https://doi.org/10.32479/ijeep.11931
... They find that these reforms tend to be followed by a significant increase in domestic market capitalization, transactions, and capital rising. (Dobnik, 2011) (Levine, R., & Zervos, 1996) ...
Objective - This study examines the relation between stock market capitalization and international financial integration for 23 developing countries during 1996 - 2018. Methodology/Technique - By using recently developed econometric panel techniques. The present paper takes into consideration cross section and structural breaks. Findings - Our findings show several interesting results. First, the existence of a long run relationship between the stock market and financial integration, particularly when private capital flows are included. Second, with the presence of structural breaks the result shows that international financial integration has a negative impact on stock market, which means that financial integration loses its explanatory power over the crisis period. Novelty - There is no applied study on the verification of the volatility of international capital flows (foreign direct investments and remittances) in the analysis of the relationship between international financial integration and stock markets. Type of Paper - Empirical Keywords: Cointegration, Cross-Section, International Financial Integration, Panel Unit Root, Structural Breaks, Stock Market. JEL Classification: C23, C51, C58, F02, F21, F24, G01.
... This test allows breaks in level and trend as well as resolves variance and serial correlation problems. It also allows structural break dates to differ in cross-sections (Dobnik, 2011). The test has the null hypothesis that 'there is no cointegration'. ...
Achieving carbon neutrality targets is a major challenge for Organization for Economic Cooperation and Development (OECD) countries that experience mounting ecological degradation over the last few decades. To deal with this situation, the trading of green products may play a crucial role. However, previous studies have not captured the net impact of green trading, and also the international trade basket used in these studies is proxied by the trade openness index including both environment-friendly and not-so-friendly goods. To provide a solution , this research intends to capture the net effects of green goods on the environment over the period 2003 to 2016 in 35 OECD countries. This study extends the literature by computing a new Green Openness Index based on the OECD Combined List of Environmental Goods (CLEG) basket that consists of 255 products. After this, an empirical model based on the Environmental Kuznets Curve (EKC) hypothesis is developed to test the role of the Green Openness Index in environmental sustainability using methodology robust against heterogeneity and cross-sectional dependence. The outcomes unfolded the validity of the EKC hypothesis in 35 OECD countries. Empirical estimates confirmed that the Green Openness Index, which considers traditional environment-friendly goods as well as environmentally preferable goods, stimulates environmental sustainability. Finally, numerous policies are directed to accomplish carbon neutrality targets.
... Moreover, three pooling approaches, Z, P, P m , were used. P, P m is computed from the p-values averages based on the simplified MSB statistics such as P * and P * m , respectively, and Z is the standardized individual statistics (Dobnik, 2011;Piton, 2016). ...
To better analyze China's carbon neutrality target, this study investigates the effect of green innovation and investment in the energy industry on China's provincial and regional data from 1995 to 2017. Using Westerlund and Edgerton's panel cointegration test, the authors found a stable long-run relationship between CO2 emissions and its determinants. We found that under major structural breaks at the local, regional, and global levels, such as the East Asian crises of 1997, the financial crises of 2007–2008, China's RMB exchange rate reform announced on August 11, 2015, and mild recession in 2001, CO2 emissions, income, green innovation, renewable energy use, and energy industry investment are cointegrated. The environmental Kuznets curve hypothesis is valid. In the long run, income, environmental innovation, investment in the energy industry, and renewable energy consumption are key contributors in explaining CO2 emissions. The empirical evidence from augmented mean group (AMG) is consistent with the estimates of CS-ARDL. Concerning practical implications, the findings suggest that there is a need to switch the Chinese economy to more sustainable sources of energy, a viable solution to abate environmental degradation. China should introduce and shift investments to green innovation.
... Moreover, three pooling approaches including Z, P, P m are used. P, P m is computed from the average of p-values, based on the simplified MSB statistics such as P * and P * m , respectively and, Z is the standardized individual statistics (Dobnik, 2011;Piton, 2016). ...
This paper aims to analyze the impacts of emission taxes, investments in the energy sector, expenditure on research and development, technological innovation, and tertiary sector development on the Chinese provincial carbon dioxide emission figures between 1995 and 2019. The econometric analysis involved the application of the latest methods which can simultaneously account for cross-sectional dependency, slope heterogeneity, and structural break issues in the data. The overall findings revealed that provincial growth and tertiary sector development were responsible for the aggravation of the carbon dioxide emission trends in China. In contrast, higher energy investments, technological innovation, renewable energy use, expenditure on research and development, and carbon emission taxes are found to abate carbon dioxide emissions and, therefore, facilitate the carbon-abatement agenda of China. Besides, the findings also revealed emission taxes, investment in research and development, technological innovation, and renewable energy use jointly reduce carbon dioxide emissions further. In line with these abovementioned findings, several policy-level recommendations are put forward.
... Then, compare Z statistics with critical values. If the statistic of Z is greater than its critical value, the null hypothesis is rejected, and the variables will have cointegration (Dobnik 2011) Finally, after estimating the Lagrange coefficient test, the SUR test in the panel will be undertaken. Table 1 presents the results of statistical summary such as mean, maximum, minimum, standard deviation, and skewness of all the variables in our study. ...
Energy plays a vital role in every economy, and it can be considered as a driving force of economic growth. The interrelations of energy with the other variables are also significant. As many developing countries rely on energy consumption, attracting energy-intensive facilities and installations is being satisfied with foreign direct investment (FDI) which can affect environment negatively. Accordingly, FDI can stimulate economic growth and the use of energy through economic growth indirectly affects foreign direct investment. Therefore, the primary purpose of this research is a comparative study on the impact of fossil and alternative energy consumption on foreign direct investment and economic growth. Thereby, we figure out the knowledge and technology transferring via FDI and its effect on economic growth, in which direction should it be, and how it should be managed to cause less environmental pollution. So, this research consists of 14 selected developing countries for 1986–2016. The results, estimated through seemingly unrelated regression (SUR), show that alternative energy and fossil fuels have a positive effect on the GDP with the coefficient values of 0.10 and 0.02, respectively. Still oil rents do not affect economic growth. The same findings have been reached with the FDI, and energy resources amplified the foreign investment on the cost of CO2 emissions. Also, these empirical results can be considered by policymakers to help them in creating the right policies for economic growth, adopting a strategy to use more alternative energy and investing in infrastructure to reduce the burning of fossil fuel.
... The structural break tests indicate that for most countries the breakpoints both for ODA and Terrorism incidents took place at the end of the 1980s and Most panel cointegration tests, nevertheless, do not take account for the structural breaks and crosssection dependence. This often leads to the incapability to reject the null hypotheses of no cointegration (Dobnik 2011). This is why, the study employs a second generation cointegration test which accounts both for the structural breaks and cross section dependence whereby the breaks may be detected at different dates for different panels. ...
This inquiry revisits the influence of the Fourth Wave of modern terrorism as a determinant of the allocation of foreign aid. The research hypothesis of the study is predicated first, on the comprehensive review of the academic literature on the aid and insecurity nexus, whereby the literature review is augmented by the assessment of the declassified documents of the Central Intelligence Agency (CIA), which have been declassified in accordance with the Executive Order 13526, few Congressional Service Reports and expert opinions published in press. Based on the review of these sources, the study elaborates on a differential game theory model of aid allocation, which shows that there are in general two phases in the provision of international aid that are mostly shaped by the level of political and socioeconomic instability epitomized in the frequency of terrorism incidents. The subsequent quantitative analysis reveals that terrorism incidents, level of political rights and War on Terror have a statistically significant positive long run and negative short run effect on the level of OECD's foreign aid commitment. These effects are even more pronounced in the case of foreign aid's grants component. The aid in the aftermath of 9/11 is characterized by a greater long run responsiveness of the foreign aid commitment to terrorism. Over the Fourth Wave of modern terrorism, the growth rate of foreign aid in Muslim countries has been systematically 10 to 80 percent higher than in the non-Muslim countries. The subsequent assessment of the security bias of aid commitment, nevertheless, indicates that re-securitization of aid since 1998 has led to a fairly slight diversion of aid commitment from the areas with less terrorism incidents to the countries with extremely frequent terrorism incidents and areas which play the pivotal role in the counterterrorism strategy. To account for panel heterogeneity, endogeneity, nonstationarity and structural breaks the survey employs for the first time the common correlated effects (Pooled) Mean Group, Fully Modified OLS, and Toda-Yamatoto Granger Non-Causality estimators in the context of the studies on foreign aid and terrorism research.
... Eggoh et al. (2011) tested the data between economic growth and energy consumption of 21 African countries between 1970 and 2006 with the panel cointegration of Pedroni (1999Pedroni ( , 2004 and Westerlund (2006Westerlund ( , 2007 and Granger causality; and cointegration and bi-directional causality between variables were determined. Dobnik (2011) found the existence of a long-run equalization relationship between variables in the study used Westerlund and Edgerton's (2008) method to test the relation between real GDP and energy consumption for 23 OECD countries between 1971 and 2009. According to panel causality test results, there is a bi-directional relationship between variables. ...
Purpose
The purpose of this paper is to explore the relationship between energy consumption and economic growth for Brazil, Russia, China, India, South Africa and Turkey (BRICS-T) countries. In this context, this study investigates energy consumption and real output in BRICS-T countries through panel cointegration.
Design/methodology/approach
The data include energy consumption and real output for BRICS-T countries and period of 1990–2014. The variables are transformed into natural logarithm. To analyze these data, this study employed Pedroni cointegration test, the second-generation panel cointegration test, Westerlund and Edgerton (2008) test and FMOLS test.
Findings
Results indicate that there is a bi-directional causality relationship between energy consumption and economic growth for BRICS-T countries. An increase in GDP leads to an increase in energy consumption and an increase in energy consumption leads to an increase in GDP.
Research limitations/implications
This study used data that include the period of 1990–2014 for BRICS-T countries. So, further studies can use different periods of data or different countries.
Originality/value
This study provides important evidence that countries with strong growth performance need to follow bi-directional energy policies to increase both energy investments and ensure energy savings.
... As discussed earlier, the employment of time series model in a study particularly in individual countries will reduce its power in the unit root and cointegration tests (Adhikari & Chen, 2012). This view was also shared by Hsiao (1986) and Dobnik (2011) in their studies. ...
... The empirical indication of a dynamic panel error-correction model of Dobnik [39] study signify a bidirectional causal linkage between economic growth and energy use in both the short-run and long-run for 23 OECD countries during 1971-2009. Lau et al. [40] study shows that causality running from energy consumption to economic growth in the short-run, but the long-run causal relation exists from economic growth to energy consumption for the 17 Asian countries during 1980-2006. ...
This study aims to investigate the causal nexus between energy consumption and natural economic growth for 119 countries from all over the world having at-least 30 years of available data on candidate variables, including 30 high income OECD, 13 high income non-OECD, 65 middle income and 11 low income countries. The study employed Granger-causality in the frequency domain approach for empirical analysis, which allows one to examine the causal nexus over different frequencies and thus provides relatively a better picture of the causal nexus between the candidate variables. In particular, we examine the temporary (short-run) as well as at permanent (long-run) causal nexus between energy consumption and economic growth. The empirical results suggest that 18 countries (including 5 high income OECD, 2 high income Non-OECD, 10 middle income and 1 low income) confirm the existence of feedback hypothesis, 25 countries (including 4 high income OECD, 3 high income non-OECD, 14 middle income and 4 low income) confirm growth hypothesis out of total 119 countries. Similarly, 40 countries (including 6 high income OECD, 6 high income non-OECD, 27 middle income and 1 low income) suggest conservation hypothesis, while, 36 countries (comprising of 15 high income OECD, 2 high income non-OECD, 14 middle income and 5 low income) holds neutrality hypothesis between energy consumption and economic growth out of 119 countries. The finding of the study suggests that an appropriate and effective public policy is required for all sample countries both in the short and long-term, while considering sustainable economic growth and development.
... The weights of the final outputs (wnyi=NYi/NY) have been econometrically estimated.It is important to mention that productive consumption (CEP) is determined separately for all ten sectors of the input-output tables. The influence of the sectoral structure of the economy on its global energy-intensity can be thus more relevantly identified, a problem extendedly debated lately (Dobnik, 2011;Georgantopoulos et al., 2011;Stern and Kander, 2011;Liddle, 2012;Viiding and Joller. 2012;Bruns et al., 2013;Iddle and Lung, 2013;Zhang, 2013). ...
The paper describes the version (2012) of the Romanian economic macromodel. The model has been constructed taking into account the important consequences induced by the integration of the country into the European Union and by the world crisis. Some supplementary requests of the government agencies which use this forecasting tool were also included. The first chapter presents the general architecture of this version. As an applicative exercise, the second chapter estimates the preliminary indicators for 2013 and comments several predictive simulations for the next year. Some concluding remarks close our presentation.
... He applied LLC test, IPS test, panel cointegration test and found bi-directional causality between energy and the economy. Dobnik (2011) measured the relationship between real GDP and energy consumption with a data set of 23 OECD countries from 1971 to 2009. He incorporated the panel econometric techniques which include panel error correction model and Granger causality test with structural breaks. ...
Energy consumption is a key factor in economic activity. To ascertain its role in economic growth, this study empirically investigates its role for Asian countries. Price index is also included in analysis as factor of economic growth. We examine and quantify this long run relationship for a sample of selected Asian countries with data on relevant variables for a large time dimension (1970 to 2012). Econometric precision is brought by using pooled mean group (PMG) besides other Pedroni, Kao and Westerlund panel cointegration tests. PMG being heterogeneous panels estimation technique allows the slope and short run parameters to vary across the countries. Structural breaks are also incorporated to observe the impact of shocks that leave permanent effect on national income. Results show the presence of long run relationship between energy consumption and national income. The positive contribution of energy consumption is quantified using Fully Modified OLS and dynamic OLS as well. Policy recommendations are made on the basis of empirical analysis.
The causal relationship between economic growth and financial development is crucial for the dynamics of economic growth and the financial background it generates. However, doubts about the shape of the relationship may lead to indecision in the economic policies to be implemented. The aim of this study is to analyze and provide evidence on the relationship between the two variables in order to overcome this ambivalence. In this panel data analysis of 24 Asian countries covering the 2000-2020 period, firstly Cross-sectionally Augmented Dickey-Fuller (CADF) Unit Root Test, one of the second-generation unit root tests, and then Dumitrescu & Hurlin (2012) Panel Z_NT causality tests were applied. According to the causality test results, there is a bidirectional relationship between GDP and financial development. In addition, gross fixed capital formation (GFCF), which is included in the model as a control variable, is also found to have a bidirectional relationship with both variables. Thus, the evidence supporting the interaction view that combines supply and demand side theories reveals the importance of taking both variables into account in economic policy decisions.
Uluslararası ekonomi teorilerindeki en önemli konulardan biri, satınalma gücü paritesinin döviz kuru belirleme modelleri içerisinde yer alıp almadığıdır. Bu çalışmada da özellikle E-7 (Brezilya, Çin, Endonezya, Hindistan, Meksika, Rusya, Türkiye) ülkelerinde satınalma gücü paritesinin geçerli olup olmadığının incelenmesi amaçlanmıştır. Çalışmada söz konusu ülkelerin 1992-2022 dönemi verilerinden yararlanılmıştır. Yapılan ekonometrik inceleme sonucunda yatay kesitin bağımlı olduğu ve homojenlik varsayımı kabul edilmiştir. Bundan dolayı değişkenlerin durağan olduğu seviyenin tespit edilmesinde Bootstrap Hadri ikinci nesil birim kök testinden yararlanılmış ve değişkenlerin birinci farkında durağan olduğu anlaşılmıştır. Bundan dolayı değişkenler arasındaki eşbütünleşme ilişkisinin tespit edilmesinde ikinci nesil bir eşbütünleşme testi olan ve yatay kesit bağımlılığı altında çalışan Westerlund ECM testinden yararlanılmıştır. İnceleme sonucunda nominal döviz kuru ile yurtiçi fiyat seviyesinin yurtdışı fiyat seviyesi olan oranı arasındaki ilişkinin olumlu yönde olduğu yani değişkenler arasında eşbütünleşme ilişkisi olduğu tespit edilmiştir. Böylelikle bu çalışmada E-7 ülkelerinde satınalma gücü paritesinin geçerli olduğu kabul edilmiştir.
Given the increasing investment by Belt and Road Initiative (BRI) participants in the renewable energy industry, it is imperative to ascertain how much this investment contributes to economic growth. The objective of this study is to ascertain the extent to which renewable energy contributes to economic growth within the Belt and Road Initiative compared to non-renewable energy sources. Prior studies have yet to incorporate oil prices as a variable in the production function, among other output aspects. This study integrates the inclusion of real oil prices as a variable within the production function alongside capital, labor, renewable energy consumption, and non-renewable energy consumption. A cohort including 49 Belt and Road Initiative participants was formed, encompassing data from 1990 to 2019. The data has undergone an initial examination to assess cross-sectional dependence, slope heterogeneity, and structural break(s), and are verified. Hence, third-generation panel data analysis has been utilized. The continuously updated fully modified estimator and continuously updated biased corrected estimator provide evidence supporting the notion that renewable energy plays a substantial role in fostering economic growth within nations participating in the Belt and Road Initiative. Furthermore, this contribution is found to be more pronounced when compared to the impact of non-renewable energy sources. The study's findings inform policy recommendations at both the BRI and national level.
Mutluluğun kaynağına ilişkin pek çok farklı görüş bulunmaktadır. Mutluluk ekonomisinde gelir, mutluluğun en
önemli kaynağı olarak gösterilmektedir. Bu sebeple gelir ve mutluluk arasındaki ilişki yıllardır tartışılagelmiş bir konu
olmuş ve bu konuda özellikle de Easterlin Paradoksu bir ilk olarak öne çıkmıştır. Easterlin Paradoksu, hem ülke
içerisinde hem de ülkeler arasında belirli bir düzeye kadar mutluluğun gelirle pozitif ilişkisi olduğunu, ancak uzun
dönemde mutluluk ve gelir arasında bir ilişkinin olmadığını ileri sürmektedir. Bu çalışmada gelir ve mutluluk arasında
bir ilişki olup olmadığı kısacası Easterlin Paradoksunun geçerli olup olmadığının test edilmesi amaçlanmıştır. Bu
amaçla seçili sekiz (Bulgaristan, Estonya, Letonya, Litvanya, Macaristan, Romanya, Slovakya, Slovenya) geçiş
ekonomisinin 2007-2019 dönemi verilerinden yararlanılmıştır. Sonuçta Easterlin Paradoksunun geçerliliği
kanıtlanmıştır.
The knowledge-based economies have reacted by enacting stringent legislation and encouraging innovation in environmental-related technologies (IERTs) across organizations, such as academic institutions. Although previous research continues to support green innovation as a pro-cyclical concept, the irregular effect of IERT dynamics on CO2e in knowledge-based economies has not yet been studied. The paper looks at the cyclical nexus between IERT and CO2e in 37 knowledge-based economies using panel data from 1990 to 2019. The augmented mean group supported that an adverse change in IERT contributes to CO2e during economic downturns. Second, the findings confirmed that positive dynamics in IERT reduces CO2e during economic expansions. Third, the findings signified that trade openness, expansionary commercial policy, gross domestic product per capita, and expansionary monetary policy all increase CO2e, while contractionary commercial policy and use of renewable energy all decrease CO2e. Overall, the results of this study showed that there is a counter-cyclical association between IERT and CO2e. It is suggested that to reduce CO2e in knowledge-based economies, the government should support IERT in both economic contraction and expansion periods.
The role of civic participation in issues directly or indirectly related to environmental quality is reputed to be on the rise globally. Bottom-up grassroots movements can be conducive to powering socially acceptable, smooth, and hence, more efficient transitions toward low-carbon energy futures. This factor can also unlock the potential of communities, improving the adaptation and social acceptability towards major changes and providing possible policy instruments. On contrary, bottom-up grassroots movements are unfavorable to the extension of renewable energy capacities, especially in the case of wind energy, if this causes costs for the local communities, which outweigh the corresponding benefits. Determining these dynamics is pivotal for addressing public ecological concerns and calls for quantitative regional studies. This paper addresses the nexus between civic engagement and energy transition in 11 countries of the Nordic-Baltic Sea Region. The study detects a strong positive relationship between civic engagement within environmental organizations and the share of renewable energy sources in the domestic electricity mixes of the countries of the Nordic-Baltic Sea Region. Nonparametric panel estimator with fixed effects reveals that the impact of civic engagement has been continuously rising – i.e. the significance of civic engagement as a factor in the energy transition has risen. Nevertheless, the study also finds that the magnitude of civic engagement over the years has been relatively stable in most countries of the region since 1981. In a few of them, civic engagement has been declining. The work argues that this decline could be attributed to the fact that politics, especially since 2005, deemed environmental issues as an important aspect of public policy – a factor that contributed to mainstreaming the phenomenon.
In this paper, we investigate the effect of remittances on energy consumption. To this aim, we analyzed MENA countries over the 1977–2014 period. We used Westerlund and Edgerton's (2007) cointegration test, the AMG estimator, and Dumitrescu and Hurlin's (2012) panel causality tests. The results of the cointegration test showed there is a long-term relationship between remittance inflow and energy consumption. According to the AMG estimator, remittance inflow has a positive impact on energy consumption, indicating that increases in remittances will be followed by increases in energy consumption. The panel causality test displayed a bidirectional causal linkage between remittance and energy consumption. On the basis of these findings, we can say that authorities should take account of remittance inflow in their energy consumption and environmental degradation policies.
This study is a meta-analytic investigation of energy consumption and economic growth. It makes a literature survey on the dynamic causal relationship between broad variables of energy and economic growth for the period 1974–2021. The objective of this study is to investigate stationarity, cointegration and direction of causality between energy consumption and economic growth. It uses survey methods to profile related literature of the energy consumption–economic growth nexus. It tests four established hypotheses, feedback, growth, conservation and neutrality. It concentrates on both country as well as multi-country panel based studies. The variables chosen, econometric as well as theoretical models, time periods has contributed to the increased level of disagreement. The results are thoroughly mixed with no agreement, some studies are explicit on the degree to which results are contentious. There is no consensus for both country specific as well as panel based studies. On the whole the growth hypothesis is the most dominant outcome for country based studies. Our findings indicate that this debate is inconclusive with growth hypothesis accounting for 43.8%, feedback 18.5%, conservation 27.2%, and neutrality hypothesis 10.5% for country specific studies. This study gives a footprint of the state of the art and stimulates the level of debate for researchers on energy consumption and economic growth.
This chapter addresses the nexus between civic engagement and energy transition in the countries of the Baltic Sea region. The study detects a strong positive relationship between civic engagement within environmental organizations and the share of solar and wind energy in the energy mixes of the countries of the Batic Sea region. Nonparametric panel estimator with fixed effects reveals that over the years the impact of civic engagement has been rising continuously, i.e. the significance of civic engagement as a factor of the energy transition has risen. Nevertheless, the study also finds that the magnitude of civic engagement over the years since 1981 has been relatively stable in most countries of the region. In a few of them civic engagement has been on the decline. We argue that this decline could be attributed to the fact that politics, especially since 2005 deemed environmental issues as an important aspect of public policy.
The study investigates the determinants of economic growth in the presence of structural breaks using the Gregory and Hansen co-integration model in the Ghanaian economy for the period 1971 to 2011. The variables considered as the determinants were financial development, inflation, government expenditure, and trade openness. The empirical findings are in agreement with the existence of co-integration in the presence of structural breaks. The study shows that there are structural breaks that coincide with identified climatic, economic, and political shocks. The finding does not support short-run nexus between growth and the determinants considered in the study. However, financial development, government expenditures, and trade openness are the long-run determinants of growth. In respect of policy, government-initiated structural reforms aimed at ensuring growth is of limited value, since the effect of such reforms on the long-run growth path will be offset by other shocks to the economy. Besides, in other to achieve sustainable economic growth, policymakers should put in place strategies to ensure that the financial sector is properly strengthening, trade is appropriately liberalized and government expenditure is targeted at the productive sector of the economy. Future studies, in line with the focus of the current study, based on panel cointegration, accounting for structural beaks effect, is worth embarking on.
This study investigates the role of natural resources rent, green investment, financial development and energy consumption in mitigation of carbon emissions to achieve sustainable development goal of a clean environment by using the panel data of 30 provinces of China from 1995-2017. This study employs novel cross-sectionally augmented autoregressive distributed lags (CS-ARDL) methodology to find the long and short-run impact of the variables of the study on carbon emission, where CS-ARDL estimates confirm the positive impact of energy consumption and financial development on carbon emissions (CO 2). Moreover, green investment is negatively linked to CO 2 , whereas national natural resources rent is positively associated with carbon emissions. Similarly, augmented mean group and common correlated effect mean group methods provide supportive results for CS-ARDL estimates. This study recommends strengthening of national natural tax law, promotion of green investment and environmental-friendly policies to control carbon emissions.
Presented at the 50th SEDSI Annual Conference Charleston, SC on February 12 – 14, 2020.
SONUÇ
Yatırımcılar günümüz finans dünyasında farklı ülkelere yatırım yapabilmektedir. Bu nedenle yatırım yapacakları ülkenin risk durumu hakkında yeterli bilgiye sahip olmak önem arz etmektedir. Yatırımcılar yüksek getiri yanında düşük riski tercih ettiklerinden, risk oranı düşük olan ülkeyi tercih etme eğilimdedirler. Ancak eğer ülkenin getiri oranı yüksek ise belli bir miktarda riske katlanmayı da göze alabilirler. Gelişmekte olan ülkeler, gelişmiş ülkelerden daha riskli olmalarına rağmen, yüksek getirilerinden dolayı genelde tercih edilmektedirler.
Ülke riski ile borsa endeksleri arasında birçok çalışma yapılmasına rağmen gelişmekte olan ülkeleri topluca ele alan çalışmalar sınırlı kalmıştır. Bu çalışmada gelişmekte olan ülkelerde risk faktörlerinin borsa üzerindeki etkisi analiz edilmeye çalışılmıştır. Bu kapsamda öncelikle değişkenler hakkında ön testler
yapılarak değişkenlerin, yatay kesit bağımlılığı içerdiği ve seviyede durağan olmadıkları belirlenmiştir. Devamında beş model oluşturulmuş ve modeller hakkında homojenlik ve yatay kesit bağımlılıklarının sınanması ile ön testler tamamlanmıştır. Bu testler sonucunda modellerin heterojen olduğu ve yatay kesit bağımlılığı içerdiği saptanmıştır.
Ön testlerden sonra değişkenler arasındaki uzun dönemli ilişkiyi belirlemek için Durbin Hausman eşbütünleşme testi kullanılmıştır. Bu test sonucunda değişkenlerin eşbütünleşik olmadıkları belirlenmiştir. Bazen değişkenler eşbü- tünleşik oldukları halde yapılarındaki kırılmalardan dolayı eşbütünleşik görünmeyebildikleri için değişkenler arasındaki uzun dönemli ilişki, yapısal kırılmaları dikkate alan Westerlund-Edgerton eşbütüneşme testi ile tekrar sınanmıştır. Ancak kırılmalar etrafında da değişkenler arasında eşbütünleşme ilişkisinin olmadığı saptanmıştır. Bu testten elde edilen diğer bir sonuç ise ülkelerdeki kırılma tarihlerinin genel olarak 2008 küresel krizinin olduğu tarihte toplandığı belirlenmiştir.
Çalışmada son olarak Emirmahmutoğlu-Köse nedensellik testiyle ülke risk faktörleriyle borsa arasındaki kısa dönemli nedensellik ilişkisi incelenmiştir. Bu analiz sonucunda risk faktörleri ile borsa arasındaki ilişkinin ülkeden ülkeye farklılık gösterdiği belirlenmiştir. Bununla birlikte panel sonuçlarına göre; politik risk ile borsa endeksi arasında nedensellik ilişkisi olmadığı, toplam ülke riski ile borsa arasında ise çift yönlü nedensellik olduğu tespit edilmiştir. Borsadan finansal riske doğru ve ekonomik riskten borsaya doğru ise tek yönlü nedensellik olduğu saptanmıştır.
Risk bileşenleri dikkate alındığında Ülkenin GSYH, bütçe ve enflasyon gibi makroekonomik değişkenlerinden hareketle hesaplanan ekonomik riskten borsaya doğru nedensellik olduğu görülmektedir. Borsalar ekonominin barometresi olduğundan ekonomideki riskin borsayı etkilemesi normal görülmektedir. Finansal riskte ise dış borç ve likidite gibi faktörler dikkate alınmaktadır. Burada borsadan finansal riske doğru nedensellik ilişkisinin nedeni gerek devletin gerekse de firmaların daha çok borsa üzerinden borçlanmaları ve finansal enstrümanların likiditesinin borsa sayesinde sağlanması ile izah edilebilir. Politik risk objektif kriterlere dayanmadığından bu risk doğru ölçülememiş ve nedensellik ilişkisi bulunmamış olabileceği gibi ele alınan dönemde politik risk ile borsa arasında herhangi bir nedensellik ilişkisi olmamasından da kaynaklanabilir.
Elde edilen sonuçlar literatür ile karşılaştırıldığında uzun dönemli ilişki ile ilgili genel olarak diğer çalışmalardan farklı sonuçlar elde edildiği görülmüştür.
Almahmoud (2014), Muzindutsi ve Nhlapho (2017), Sarı vd. (2013), Kara ve Karabıyık (2015) değişkenler arasında uzun dönemli ilişki tespit etmelerine rağmen bu çalışmada değişkenler arasında uzun dönemli ilişki bulunamamıştır. Nedensellik açısından literatürdeki diğer çalışmalarla kısmen benzer kısmen farklı sonuçlar elde edilmiştir. Ekonomik ve politik riskten borsa endeksine doğru tek yönlü nedensellik ilişkisi bulan Yapraklı ve Güngör (2007)’ün çalışması ile sadece ekonomik risk ile borsa arasındaki ilişki açısından benzerlik göstermektedir. Tükenmez ve Kutay (2016) ve Ayaydın vd. (2016) çalışmaları ile farklılık gösterdiği, Risk faktörlerinden borsaya doğru tek yönlü nedensellik bulan Kara ve Karabıyık (2015) çalışması ile ise kısmen benzerlik gösterdiği görülmektedir.
Sonuç olarak bütün risk faktörlerinin toplamından hareketle elde edilen toplam ülke riski ile borsa arasında çift yönlü nedensellik ilişkisi elde edildiğinden ülke riski ile borsa arasında kısa dönemde karşılıklı nedensellik ilişkisi bulunduğu ifade edilebilir. Ancak risk faktörleri ile borsa arasında eşbütünleşme ilişkisi olmadığından uzun dönemde ülke risk faktörleri ile borsa arasında ilişki olmadığı anlaşılmaktadır.
This study investigates whether the effect of energy consumption on economic growth differs by the level of energy intensity. We employ an advanced dynamic panel threshold regression model to test for the “threshold” level of energy intensity that has an asymmetrical energy consumption effect on economic growth; we consider 12 Commonwealth of Independent States countries over the period 1991–2013. The estimated panel threshold regression model suggests 0.44% as the threshold level of energy intensity. Energy consumption above this level significantly retards economic growth, whereas energy consumption below the level is found to have a statistically significant positive effect on economic growth. Thus, when the threshold level of energy intensity (one of the important indicators of energy efficiency) is exceeded, energy consumption significantly hinders growth. If policy makers pay more attention to energy intensity while formulating new energy policies, substantial gains can be achieved in low energy intensity environments.
Este trabajo busca establecer la relación entre el consumo de energía (agregada, combustibles
y energía eléctrica), la producción manufacturera y el nivel de empleo en México durante
2003-2012. Diversos estudios señalan la existencia de una correlación positiva entre estos
aspectos; mientras que otros señalan que el consumo de energía es neutral. En el caso de
México, el consumo de energía no parece reflejar una clara relación ni con la producción ni
con el empleo. Para determinar dicha relación, se emplea una metodología de cointegración de
panel. Se estima el sentido de la causalidad de corto y largo plazos desde dos enfoques:
de Granger y el pmg. El documento es de relevancia para la política económica dado que
presenta evidencia favorable de la hipótesis de realimentación, señalando la interdependencia
y complementariedad entre consumo de energía y producción y empleo industriales.
Oil is one of the energy sources which has a great importance in the daily life and oil price is one of the most important economic factors which effects the world economy. A small change in oil price has positive or negative affects on all economic variables. Crude oil shocks do not only originate f rom the supply-side of the crude oil market but may also be demand driven. Oil price shocks can affect macroeconomic variables such as GDP, inflation, employment as weel as stock market prices and returns. Negative supply shocks on crude oil prices may also case the direction of decrease in economic growth and increase in inflation. This study investigate the relationship between crude oil shocks and stock markets by using autoregressive distribution lag test for threshold cointegration for G7 countries with monthly data set for the period of 2002- 2014. The ADL (autoregressive distributed lag) model is estimated by using with indicator A for Canada, USA, England, Germany and France and with with indicator B for Japan and Italy. The results of empirical evidence shows that the long term coefficient are statistically significiant for each country. This also shows that crude oil prices and stock markets series are cointegrated. On the other hand, the results reach that the l ong-run equilibrium of adjustment process is asymmetric.
The energy sector unarguably play a crucial role economic growth and employment in developed countries. The changes in energy use, particulary electricity consumption, are often correlated with changes in macro economic variable such as economic development, labor market, investment. This paper aims to reveal the relationship between electricity consumption and macroeconomic variables by using new techiques for seasonal unit root test for panel data. At first, we have applied the HEGY-IPS test which is the presence of seasonal panel unit root test. Secondly, we have investigated the relationship between electricity consumption, income and employment in G-7 countries using seasonal cointegration analysis which is called EGHL-type test over the period of 1995:q1 to 2013:q3. The results of this study show that all variables have unit root at zero frequency and electricity consumption and employment series have seasonal unit roots at semi-annual and annual frequencies for each countries. Besides that, there exists seasonal panel unit roots in electricity consumption and employment series excepted income series. These results indicate that the series are possibly cointegrated. For G-7 countries, there isn't any cointegration relationship detected among the electricity consumption, real GDP and employment series at the zero, semi annual and annual frequencies excepted for Italy.
The article develops a resource drag model based on the endogenous growth theory, and provides fresh empirical evidence to estimate the drags for China by using the recently developed panel model with both cross-sectional dependences and structural breaks. The results indicate that there exists a long-run equilibrium relationship between GDP and its inputs, and both the land and water resources have significantly positive impacts on GDP except from some provinces after allowing for cross-sectional heterogeneities and structure breaks. In addition, the study employs the common correlated effects estimators to investigate the resource drags at both the pooled and individual levels. The result shows that the aggregate drag reduces annual growth rate by about 0.016 percentage points in China as a whole while there exist significant differences in both these disaggregate and aggregate drags for the province-groups, suggesting there is a fair amount of geographic clustering for them.
Let n observations Y 1, Y 2, ···, Y n be generated by the model Y t = pY t−1 + e t , where Y 0 is a fixed constant and {e t } t-1 n is a sequence of independent normal random variables with mean 0 and variance σ2. Properties of the regression estimator of p are obtained under the assumption that p = ±1. Representations for the limit distributions of the estimator of p and of the regression t test are derived. The estimator of p and the regression t test furnish methods of testing the hypothesis that p = 1.
This study was conducted to evaluate the causality between energy consumption, GDP growth and carbon emissions for eight Asia-Pacific countries from 1971 to 2005 using the panel data. The results indicate that there are long-run equilibrium relationships between these variables. Additionally, causality from energy consumption to CO2 emissions was observed generally, but there were some opposite relationships also. Parameter estimations of the panel data model indicate that there are great differences in the carbon emissions, the efficiencies of energy use, carbon emissions of unit GDP and unit energy consumption between developed and developing countries. The base carbon emissions, per capita energy consumption and efficiency of energy use in developing countries are far lower than in developed countries; however, the CO2 emissions per unit of energy use is higher. Although developing countries may reduce their CO2 emission per unit energy use, total energy consumption will rise rapidly with economic development. Thus, developing countries must determine how to undergo economic growth while conserving energy and reducing emissions. To respond to global climate change, it is necessary to develop innovative technology for energy use, transform the energy structure and conduct the clean development mechanism.
This paper examines the long-run relationship between energy consumption and real GDP, including energy prices, for 25 OECD countries from 1981 to 2007. The distinction between common factors and idiosyncratic components using principal component analysis allows to distinguish between developments on an international and a national level as drivers of the long-run relationship. Indeed, cointegration between the common components of the underlying variables indicates that international developments dominate the long-run relationship between energy consumption and real GDP. Furthermore, the results suggest that energy consumption is price-inelastic. Causality tests indicate the presence of a bi-directional causal relationship between energy consumption and economic growth.
This paper develops unit root tests for panel data. These tests are devised under more general assumptions than the tests previously proposed. First, the number of groups in the panel data is assumed to be either finite or infinite. Second, each group is assumed to have different types of nonstochastic and stochastic components. Third, the time series spans for the groups are assumed to be all different. Fourth, the alternative where some groups have a unit root and others do not can be dealt with by the tests. The tests can also be used for the null of stationarity and for cointegration, once relevant changes are made in the model, hypotheses, assumptions and underlying tests. The main idea for our unit root tests is to combine p-values from a unit root test applied to each group in the panel data. Combining p-values to formulate tests is a common practice in meta-analysis. This paper also reports the finite sample performance of our combination unit root tests and Im et al.'s [Mimeo (1995)] t-bar test. The results show that most of the combination tests are more powerful than the t-bar test in finite samples. Application of the combination unit root tests to the post-Bretton Woods US real exchange rate data provides some evidence in favor of the PPP hypothesis.
Increased economic growth and demand for energy in emerging economies is creating an opportunity for these countries to increase their usage of renewable energy. This paper presents and estimates two empirical models of renewable energy consumption and income for a panel of emerging economies. Panel cointegration estimates show that increases in real per capita income have a positive and statistically significant impact on per capita renewable energy consumption. In the long term, a 1% increase in real income per capita increases the consumption of renewable energy per capita in emerging economies by approximately 3.5%. Long-term renewable energy per capita consumption price elasticity estimates are approximately equal to −0.70.
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.
This paper develops a new methodology that makes use of the factor structure of large dimensional panels to understand the nature of nonstationarity in the data. We refer to it as PANIC-Panel Analysis of Nonstationarity in Idiosyncratic and Common components. PANIC can detect whether the nonstationarity in a series is pervasive, or variable-specific, or both. It can determine the number of independent stochastic trends driving the common factors. PANIC also permits valid pooling of individual statistics and thus panel tests can be constructed. A distinctive feature of PANIC is that it tests the unobserved components of the data instead of the observed series. The key to PANIC is consistent estimation of the space spanned by the unobserved common factors and the idiosyncratic errors without knowing a priori whether these are stationary or integrated processes. We provide a rigorous theory for estimation and inference and show that the tests have good finite sample properties.
This paper applies panel unit root, panel cointegration, and panel causality techniques to re-examine the total energy and electricity demand functions of 25 selected OECD countries during the 1978-2004 period. The panel results indicate that total energy demand is income inelastic and price inelastic, whereas electricity demand is income elastic and price inelastic. Based on the results of the panel causality test, there are reciprocal causal relationships among real income, real energy price, and total energy consumption. Furthermore, a uni-directional causality runs from income and electricity price to electricity onsumption. The results for the panel as a whole suggest that the demand for total energy and electricity in the OECD countries is driven largely by strong economic growth, while consumers are largely insensitive to price changes.
This study tests the relationship between energy consumption and economic growth in Sub-Saharan Africa, using a panel co-integration approach. Country-level time series data of energy consumption and economic growth are pooled and used to estimate the model. Sub-Saharan African countries in the sample are classified into low income and middle income countries. The findings support the neutrality hypothesis in the short-run, except for middle income countries, and a strong causation running in both directions is found in the long-run. The different results for low and middle income countries provide evidence of the importance of income level in the causal relationship. This study helps to explain the interdependence of energy consumption and economic growth in Sub-Saharan Africa. Results are critical in formulating sustainable development policies that are geared to the efficient allocation of resources which are expected to increase access to energy services in the study region.
SUMMARY For a nonstationary time series we consider a model which can accommodate the possibility of deterministic and stochastic
trends. Assuming that we are primarily interested in testing for the stochastic trend, that is, for a unit root in the time
series, we employ the Lagrange multiplier principle and obtain test statistics. The asymptotic distributions of the test statistics.
The asymptotic distributions of the test statistics are characterized by functionals of stochastic integrals of a standard
Brownian bridge. Unlike some of the existing test statistics for unit roots, the asymptotic distributions remain the same
whether there is a deterministic trend or not under the null model, and therefore a priori knowledge about the deterministic
trend is not needed for the test of a unit root. A numerical example is presented to illustrate the methods, and the powers
of the proposed tests for finite samples are studied through a small Monte Carlo sampling experiment.
To test the hypothesis of a difference stationary time series against a trend stationary alternative, Levin & Lin (1993) and Im, Pesaran & Shin (1997) suggest bias adjusted t-statistics. Such corrections are necessary to account for the nonzero mean of the t-statistic in the case of an OLS detrending method. In this chapter the local power of panel unit root statistics against a sequence of local alternatives is studied. It is shown that the local power of the test statistics is affected by two different terms. The first term represents the asymptotic effect on the bias due to the detrending method and the second term is the usual location parameter of the limiting distribution under the sequence of local alternatives. It is argued that both terms can offset each other so that the test has no power against the sequence of local alternatives. These results suggest to construct test statistics based on alternative detrending methods. We consider a class of t-statistics that do not require a bias correction. The results of a Monte Carlo experiment suggest that avoiding the bias can improve the power of the test substantially.
Asymptotic distributions and critical values are computed for several residual-based tests of the null of no cointegration in panels for the case of multiple regressors, including regressions with individual-specific fixed effects and time trends. The associated cointegrating vectors and the dynamics of the underlying error processes are permitted considerable heterogeneity across individual members of the panel.
This note reports results of an empirical test for determining the causal relationship between energy and gross national product. According to a current view, there is a constant and unchanging relationship between gross energy consumption and GNP. A logical corollary is that energy conservation is an unacceptable policy option since it would adversely influence economic activity. This implies that the direction of causality runs from energy to GNP as well as the other way around. With regard to the issue of causation, Sims (J. Am. Statis. Assn., Mar 1972) developed a test for unidirectional causality, which he applied to test the existence of a causal relationship between money and GNP. In this note, the authors attempt to determine both the empirical relationship between gross energy inputs and GNP and the presence of a causal link between these variables. The main empirical finding is that causality is unidirectional, only running from GNP to energy for the postwar period, and there is no causality from energy to GNP.
Unlike previous renewable energy consumption-growth studies, this study examines the relationship between renewable and non-renewable energy consumption and economic growth for 80 countries within a multivariate panel framework over the period 1990–2007. The Pedroni (1999, 2004) heterogeneous panel cointegration test show a long-run equilibrium relationship between real GDP, renewable energy consumption, non-renewable energy consumption, real gross fixed capital formation, and the labor force with the respective coefficient estimates positive and statistically significant. There is little difference in the elasticity estimates with respect to renewable and non-renewable energy consumption. The results from the panel error correction model reveal bidirectional causality between renewable and non-renewable energy consumption and economic growth in both the short- and long-run. Also, there is bidirectional short-run causality between renewable and non-renewable energy consumption indicative of substitutability between the two energy sources.Research highlights► 80 country panel study from 1990-2007 on the renewable and non-renewable energy consumption-growth relationship. ► Renewable and non-renewable energy consumption each has a positive impact on real GDP in the long run. ► Bidirectional causality between renewable and non-renewable energy consumption and economic growth.
This chapter uses fully modified OLS principles to develop new methods for estimating and testing hypotheses for cointegrating vectors in dynamic panels in a manner that is consistent with the degree of cross sectional heterogeneity that has been permitted in recent panel unit root and panel cointegration studies. The asymptotic properties of various estimators are compared based on pooling along the 'within' and 'between' dimensions of the panel. By using Monte Carlo simulations to study the small sample properties, the group mean estimator is shown to behave well even in relatively small samples under a variety of scenarios.
Summary This paper proposes a test statistic for the null hypothesis of panel stationarity that allows for the presence of multiple structural breaks. Two different specifications are considered depending on the structural breaks affecting the individual effects and/or the time trend. The model is flexible enough to allow the number of breaks and their position to differ across individuals. The test is shown to have a standard normal limit distribution with a good finite sample performance. It is applied to typical panel data of real per capita GDP in a set of OECD countries.
Purpose
The purpose of this paper is to survey the empirical literature on the causal relationship between energy consumption and economic growth.
Design/methodology/approach
The four major hypotheses (growth, conservation, neutrality, and feedback) are briefly outlined with respect to the energy consumption‐growth nexus and corresponding policy implications of each. The survey focuses on country coverage, variables selected and model specification, econometric approaches, various methodological issues, and empirical results.
Findings
Though there is no clear consensus on the results for a specific country or groups of countries, directions for future research are discussed.
Research limitations/implications
The research surveyed may be dated by the time of publication given the ongoing research in this area.
Originality/value
This paper serves as a reference for researchers on the causal relationship between energy consumption and economic growth.
This paper applies panel data analysis to examine the short-run dynamics and long-run equilibrium relationships among nuclear energy consumption, oil prices, oil consumption, and economic growth for developed countries covering the period 1971-2006. The panel cointegration results show that in the long run, oil prices have a positive impact on nuclear energy consumption, suggesting the existence of the substitution relationship between nuclear energy and oil. The long-run elasticity of nuclear energy with respect to real income is approximately 0.89, and real income has a greater impact on nuclear energy than do oil prices in the long run. Furthermore, the panel causality results find evidence of unidirectional causality running from oil prices and economic growth to nuclear energy consumption in the long run, while there is no causality between nuclear energy consumption and economic growth in the short run.
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.
This study examines the causal relationship between renewable energy consumption and economic growth for 13 countries within Eurasia over the period 1992-2007 within a multivariate panel data framework. The heterogeneous panel cointegration test reveals a long-run equilibrium relationship exists between real GDP, renewable energy consumption, real gross fixed capital formation, and labor force. The results from the error correction models indicate bidirectional causality between renewable energy consumption and economic growth in both the short-run and long-run. Thus, the empirical findings lend support for the feedback hypothesis of the interdependent relationship between renewable energy consumption and economic growth.
This paper studies the problem of unit root testing in the presence of multiple structural changes and common dynamic factors.
Structural breaks represent infrequent regime shifts, while dynamic factors capture common shocks underlying the comovement
of economic time series. We examine the modified Sargan-Bhargava (MSB) test in the panel data setting and propose ways to
handle multiple structural changes and dynamic factors. Properties of the MSB test under these non-standard conditions are
derived. For example, the test statistics are shown to be invariant, in the limit, to mean breaks. This invariance does not
carry over to breaks in linear trends, where the test statistics will converge to functionals of weighted Brownian bridges.
A simplified test statistic is then proposed, which is invariant to both mean and trend breaks. We further study pooled test
statistic based on standardization and combination of p-values. Response surfaces for p-values of all test statistics are computed to facilitate the empirical implementation of the proposed methodology. The pooled
tests are shown to have good finite sample performance.
This paper applies the most recently developed panel unit root, heterogeneous panel cointegration and panel-based error correction models to re-investigate co-movement and the causal relationship between energy consumption and real GDP within a multivariate framework that includes capital stock and labor input for 16 Asian countries during the 1971–2002 period. It employs the production side model (aggregate production function). The empirical results fully support a positive long-run cointegrated relationship between real GDP and energy consumption when the heterogeneous country effect is taken into account. It is found that although economic growth and energy consumption lack short-run causality, there is long-run unidirectional causality running from energy consumption to economic growth. This means that reducing energy consumption does not adversely affect GDP in the short-run but would in the long-run; thus, these countries should adopt a more vigorous energy policy. Furthermore, we broaden the investigation by dividing the sample countries into two cross-regional groups, namely the APEC and ASEAN groups, and even more important results and implications emerge.
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 Pacific Island countries are small island economies that are increasingly dependent on energy for growth and development, yet highly susceptible to climate change. Thus, the relationship between energy consumption and GDP is crucial for realizing their future development and growth objectives. This article tests for Granger causality and provides long-run structural estimates for the relationship between energy consumption, GDP and urbanization for a panel of Pacific Island countries. For the panel as a whole in the long-run there is bidirectional Granger causality between energy consumption and GDP and these variables exert a positive impact on each other. A 1% increase in energy consumption increases GDP by 0.11%, while a 1% increase in GDP increases energy consumption by 0.23%. The findings suggest that for the panel as a whole these countries should increase investment in energy infrastructure and regulatory reform of energy infrastructure to improve delivery efficiency, continue to promote alternative energy sources and put in place energy conservation policies to reduce unnecessary wastage. These strategies seek to realize the dual objectives of reducing the adverse effects of energy use on the environment, while avoiding the negative effect on economic growth of reducing energy consumption.
This paper applies a recent advance in panel analysis to estimate the panel cointegration and panel vector error correction models for a set of 22 OECD countries using annual data covering the period 1960–2001. We investigate the relationship between energy consumption and income using an aggregate production function and controlling for the capital stock, as well as by exploring the dynamic directions of the causality among these three variables. We firstly obtain solid and convincing evidence of a fairly strong long-run equilibrium relationship among them. Secondly, it is found that the capital stock is much more productive than energy consumption. Third, it is observed that neglecting the impact of the capital stock on income tends to overestimate the effect of energy consumption. Finally, the panel causality test shows bi-directional causal linkages exist among energy consumption, the capital stock and economic growth. Overall, the findings reveal that the capital stock plays a critical role in realizing the dynamic relationship between energy and income.
In this paper we re-investigate the co-movement and the causality relationship between energy consumption and GDP in 18 developing countries, using data for the period 1975 to 2001. Recently developed tests for the panel unit root, heterogeneous panel cointegration, and panel-based error correction models are employed. The empirical results provide clear support of a long-run cointegration relationship after allowing for the heterogeneous country effect. The long-run relationship is estimated using a full-modified OLS. The evidence shows that long-run and short-run causalities run from energy consumption to GDP, but not vice versa. This result indicates that energy conservation may harm economic growth in developing countries regardless of being transitory or permanent.
This paper uses the panel data of energy consumption and GDP for 82 countries from 1972 to 2002. Based on the income levels defined by the World Bank, the data are divided into four categories: low income group, lower middle income group, upper middle income group, and high income group. We employ the GMM-SYS approach for the estimation of the panel VAR model in each of the four groups. Afterwards, the causal relationship between energy consumption and economic growth is tested and ascertained. We discover: (a) in the low income group, there exists no causal relationship between energy consumption and economic growth; (b) in the middle income groups (lower and upper middle income groups), economic growth leads energy consumption positively; (c) in the high income group countries, economic growth leads energy consumption negatively. After further in-depth analysis of energy related data, the results indicate that, in the high income group, there is a great environmental improvement as a result of more efficient energy use and reduction in the release of CO2. However, in the upper middle income group countries, after the energy crisis, the energy efficiency declines and the release of CO2 rises. Since there is no evidence indicating that energy consumption leads economic growth in any of the four income groups, a stronger energy conservation policy should be pursued in all 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.
This paper applies a new panel data stationarity testing procedure, first developed by Carrion-i-Silvestre et al. [2005, Econometrics Journal 8, 159–175], with panel VARs that employ the generalized method of moment techniques in order to re-investigate the dynamic interactions between energy consumption per capita (LEC) and real GDP per capita (LRY) in 22 developed and 18 developing countries. When multiple breaks in the series are taken into account, there is convincing evidence of panel stationarity for LEC and LRY in both groups. The energy crises evidently had a substantive impact on both LEC and LRY in all sample countries. Furthermore, our panel VARs attest to bidirectional causality between LEC and LRY in developed countries, but there is uni-directional causality from LRY to LEC in developing countries. Finally, from the orthogonalized impulse response functions, all of the variables in the panel VARs have a positive effect on each other, but their impact is greater and more persistent in developing countries. Some important policy implications do emerge.
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.
For the first time, a new panel unit root testing procedure, developed by [51]Carrion-i-Silvestre et al. [2005. Breaking the panels: an application to GDP per capita. Econometrics Journal 8, 159–175], is applied to re-investigate the stationarity of energy consumption per capita for 7 regional panel sets covering the 1971–2002 period. With structural breaks and cross-sectional correlations introduced into the model, it becomes clear that all regional-based panels of energy consumption per capita are stationary. The structural breakpoints identify the likely causes of major changes in energy consumption in the past. The findings underscore the importance of accounting for exogenous shocks to a series and offer several important implications for policy makers and energy economists.
This paper examines the causal relationship between electricity consumption, exports and gross domestic product (GDP) for a panel of Middle Eastern countries. We find that for the panel as a whole there are statistically significant feedback effects between these variables. A 1 per cent increase in electricity consumption increases GDP by 0.04 per cent, a 1 per cent increase in exports increases GDP by 0.17 per cent and a 1 per cent increase in GDP generates a 0.95 per cent increase in electricity consumption. The policy implications are that for the panel as a whole these countries should invest in electricity infrastructure and step up electricity conservation policies to avoid a reduction in electricity consumption adversely affecting economic growth. Further policy implications are that for the panel as a whole promoting exports, particularly non-oil exports, is a means to promote economic growth and that expansion of exports can be realized without having adverse effects on energy conservation policies.
This paper examines the relationship between capital formation, energy consumption and real GDP in a panel of G7 countries using panel unit root, panel cointegration, Granger causality and long-run structural estimation. We find that capital formation, energy consumption and real GDP are cointegrated and that capital formation and energy consumption Granger cause real GDP positively in the long run. We find that a 1% increase in energy consumption increases real GDP by 0.12–0.39%, while a 1% increase in capital formation increases real GDP by 0.1–0.28%.
This study examines the relationship between energy consumption and economic growth for a panel of nine South American countries over the period 1980–2005 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. Pedroni's heterogeneous panel cointegration test reveals a long-run equilibrium relationship 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 both short-run and long-run causality from energy consumption to economic growth which supports the growth hypothesis.
The increasing attention given to global energy issues and the international policies needed to reduce greenhouse gas emissions have given a renewed stimulus to research interest in the linkages between the energy sector and economic performance at country level. In this paper, we analyse the causal relationship between economy and energy by adopting a Vector Error Correction Model for non-stationary and cointegrated panel data with a large sample of developed and developing countries and four distinct energy sectors. The results show that alternative country samples hardly affect the causality relations, particularly in a multivariate multi-sector framework.
The presence of cross-sectionally correlated error terms invalidates much inferential theory of panel data models. Recently, work by Pesaran (2006) has suggested a method which makes use of cross-sectional averages to provide valid inference in the case of stationary panel regressions with a multifactor error structure. This paper extends this work and examines the important case where the unobservable common factors follow unit root processes. The extension to I(1) processes is remarkable on two counts. First, it is of great interest to note that while intermediate results needed for deriving the asymptotic distribution of the panel estimators differ between the I(1) and I(0) cases, the final results are surprisingly similar. This is in direct contrast to the standard distributional results for I(1) processes that radically differ from those for I(0) processes. Second, it is worth noting the significant extra technical demands required to prove the new results. The theoretical findings are further supported for small samples via an extensive Monte Carlo study. In particular, the results of the Monte Carlo study suggest that the cross-sectional-average-based method is robust to a wide variety of data generation processes and has lower biases than the alternative estimation methods considered in the paper.
This work investigates the causality relationship between gross domestic product (GDP) and energy consumption in the six countries of the Gulf Cooperation Council (GCC). Recently developed panel cointegration and causality techniques are used to uncover the direction of energy–GDP causality in the GCC. Empirical results indicate a unidirectional causality running from GDP to energy consumption. Evidence shows no support for the hypothesis that energy consumption is the source of GDP growth in the GCC countries. Such results suggest that energy conservation policies may be adopted without much concern about their adverse effects on the growth of GCC economies.
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.
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.
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.
This study examines the relationship between nuclear energy consumption and economic growth for sixteen countries within a multivariate panel framework over the period 1980-2005. Pedroni's (1999, 2004) heterogeneous panel cointegration test reveals there is a long-run equilibrium relationship between real GDP, nuclear energy consumption, real gross fixed capital formation, and the labor force with the respective coefficients positive and statistically significant. The results of the panel vector error correction model finds bidirectional causality between nuclear energy consumption and economic growth in the short-run while unidirectional causality from nuclear energy consumption to economic growth in the long-run. Thus, the results provide support for the feedback hypothesis associated with the relationship between nuclear energy consumption and economic growth.
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.