The Causal Relationship Between Energy Consumption And Economic Growth

• Main Author: Cevirgen, Banu
• Other Authors: Erdil, Erkan
• Format: Others
• Language: Eng
• Published: METU 2008
• Subjects: HB Economic Theory 1-846.8; Energy Consumption; Economic Growth; Causality; Panel Data
• Online Access: http://etd.lib.metu.edu.tr/upload/2/12609973/index.pdf

The causal relationship between energy consumption and economic growth has been a controversial subject of the empirical literature. However, there is no common consensus neither on the existence nor on the direction of the causal relationship between energy consumption and economic growth. The purpose of this study is to investigate the causal relationship between energy consumption and economic growth using a consistent data set. Recently developed Granger causality tests in panel data models are used to uncover the existence and direction of causality between energy consumption economic growth in 21 low-income, 35 middle-income, and 26 high-income countries over the period 1990&ndash === 2004. The empirical results explicitly support that the Granger causality from energy consumption to economic growth is more common in high-income countries than low-income and middle-income countries. Furthermore, the Granger causality from economic growth to energy consumption is more common in low-income and middle-income countries than high-income countries.