An Econometric Analysis of Relationship between Economic Growth and Petroleum Consumption in India

This study attempts to explore the dynamic causal and inter-relationships among tourism, economic growth and energy consumption in India. This study covers the annual data from 1971 to 2012. This study applies the cointegration and generalised variance decomposition methods to verify the relationship. The bounds testing approach to cointegration and the Gregory–Hansen test for cointegration with structural break consistently reveal that energy consumption, tourism and economic growth in India are cointegrated. We find that tourism and economic growth strongly affects energy consumption in the long-run. Additionally, we also find that tourism and economic growth in India are inter-related, but the causal effect of tourism on economic growth is stronger than the other way around in both the short- and long-run. Therefore, this study concludes that the tourism-led growth hypothesis is valid but the energy-led growth hypothesis is invalid in India. With such findings, we can confirm that tourism is an important catalyst of growth to the Indian economy. Therefore, policy-makers should promote and expand tourism industry in order to sustain the process of economic growth and development in India.

The main purpose of this study is to examine the nexus between energy consumption disaggregated into Petroleum and Electricity Consumption and Economic Growth in Ghana in a cointegrated VAR framework. The Johansen test of cointegration indicates that there is no long run relationship between electricity consumption and economic growth. On the other hand, the Johansen test of cointegration indicates that there is a positive long run relationship between petroleum consumption and economic growth. Since there was no existence of long run relationship between electricity consumption and economic growth, the variables were first differenced, and the causality test conducted in a VAR framework. The results of the Granger causality based on the VAR revealed that there is a unidirectional causality from economic growth to electricity consumption in Ghana. The granger causality based on the Vector Error Correction Model (VECM) revealed that there is a unidirectional causality running from petroleum consumption to economic growth in both the short and long run. The impulse response function shows that economic growth responds positively to shocks in petroleum consumption whiles electricity consumption responds positively to a shock in economic growth. It is recommended that appropriate electricity conservation measures should be developed and intensified since this will not retard growth in the economy. Also, petroleum consumption seems to be an important principal factor in short run as well as in the long run for the Ghanaian economy, policies should therefore be targeted at making constant and available petroleum products so that the Ghanaian economy can grow positively.

India is one of the largest producer and consumer of electricity in the world owing to being one of the most populous country in the world signifying the demand for electricity is only set to grow further. World has witnessed an era of economic growth aided pertinently by electricity consumption and growing demand. With FDI indorsed downright to this vital utilities sector, it becomes imperative to cognize the relationship of Electricity Consumption, Economic Growth and FDI in India. In this study we investigate the causal direction of relationship among Foreign Direct Investment, Electricity Consumption and Economic Growth in India by using time-series data for the period 1986–2021 and employing econometric models. We find two uni-directional causalities running from Electricity Consumption to Economic Growth and Economic Growth to FDI and a bi-directional causality between Electricity Consumption and FDI. The results of the study provide a novel perspective for policy makers while formulating policies related to the power sector and foreign direct investments in India. The focus of Policy makers should be on enabling electricity service providers to offer best services to commercial and non-commercial participants as it aids in Economic growth of the country. For enhanced economic growth a country like India must have good and world-class infrastructure, efficient and effective regulatory mechanism equitable for all stakeholders, an improved living standard for people of all economic strata and a stable, healthy business friendly environment coupled with policy stability through stable government.

Analyzing the causal relations between electric power consumption and economic growth in India

PurposeThe purpose of this paper is to examine the nexus among economic growth, nonrenewable energy consumption and renewable energy consumption in India over the period 1971-2017.Design/methodology/approachThis study uses nonlinear autoregressive distributed lags model and asymmetric causality test to explore nonlinearities in the dynamic interaction among the variables.FindingsThe findings indicate that the impact of nonrenewable energy consumption and renewable energy consumption on the economic growth is asymmetric in both long run and short run. In long run, a positive shock in nonrenewable energy consumption and renewable energy consumption exerts a positive impact on growth. However, the negative shocks in nonrenewable energy consumption produce larger negative effects on the growth. The results of nonlinear causality test indicate a unidirectional causality from nonrenewable energy consumption and renewable energy consumption to economic growth and thus support “growth hypothesis” in context of India.Practical implicationsThe findings imply that policy measures to discourage nonrenewable energy consumption may produce deflationary effects on economic growth in India. Further, the findings demonstrate the potential role of renewable energy consumption in promoting economic growth.Originality/valueTo the best of the authors’ knowledge, this study is the first attempt to explore nonlinearities in the relationship between economic growth and the components of energy consumption in terms of renewable and nonrenewable energy consumption.

Towards sustainable development: The impact of transport infrastructure expenditure on the ecological footprint in India

The present study is aimed at exploring the relationship between insurance consumption and economic growth in India during 1990–2016. Annual insurance penetration, insurance density, and per capita GDP have been used to study the relationship between insurance consumption and economic growth by employing the Johansen cointegration technique. A vector error correction model is applied to study the short-term and long-term relationship between the variables. A one-way causality originating from insurance penetration to economic growth is revealed in the long run. Similarly, insurance density also causes long-term economic growth. Insurance penetration leads to short-term economic growth in India. However, economic growth does not cause insurance penetration or density in the short run as well as in the long run. The results empirically establish the relationship between the insurance industry and economic growth in India post-liberalization. The results could help policymakers to focus on enhancing the insurance industry’s performance in India to achieve higher economic growth. The existing literature on how insurance consumption and economic growth are related is focused on developed economies. It ignores the non-life insurance segment of the industry and has not taken a long time period to get a complete picture of the interrelationship. This is a novel attempt to investigate the causal relation between economic growth and the insurance industry’s growth in post-liberalized India.

The impact of financial development and economic growth on renewable energy consumption: Empirical analysis of India

This paper investigates the long-run equilibrium relationship between economic growth and trade openness in India during the period 1960-2018 using the asymmetric error-correction model with threshold cointegration. To evaluate the robustness impact of trade openness on economic growth under different regimes, we divide the full sample period into two sub-periods, i.e., pre-trade reforms period 1960-1990, and post-trade reforms period 1991-2018. The study indeed confirms the evidence of asymmetric cointegration between economic growth and trade openness in India during the period under evaluation and over the different sub-periods. The estimated asymmetric error-correction model exhibits a different speed of adjustment in trade openness in response to positive and negative economic growth shocks in the short-run. More specifically, during the pre-reforms period, deviations from the long-run equilibrium due to a relative increase in economic growth have a lower speed of adjustment in comparison to deviations caused by a corresponding decrease in economic growth in India.

This study aims to empirically test the relationship between agriculture economic growth and energy consumption in India covering the annual time series data for the period 1985 to 2017 on four economic indicators namely agricultural value added (constant 2010 US$) as an alternate favoring fiscal development of agriculture, energy spending represented by agricultural electricity consumption (GWh), agricultural gas consumption (mmcft) and agricultural oil consumption (tons) in India. The study variables are assessed for stationary using the ADF tests and after confirming the same order of integration, the Johansen's Co-integration Test is exercised to find the extended association amid agriculture growth and energy consumption. Both the Trace and Lmax tests found that there exists one co-integrating equation in the system. The co-integration test confirms the long run equilibrium relation between energy consumption and agricultural economic growth in India. The short run relationships are tested by using the VECM methodology and finally the impulse responses are studied for the forecast horizon of ten years period to assess the performance of agricultural growth Vis a Vis energy consumption by imposing one standard deviation shock to the independent variables.Keywords: Co-integration, Agricultural Growth, Energy Use & Time Series AnalysisJEL Classifications: C32, O13, Q40DOI: https://doi.org/10.32479/ijeep.9711

ABSTRACTThe present study investigates the impact of renewable and nonrenewable energy use on economic growth in India within the energy consumption–growth framework over the period 1971–2012 using a multivariate model wherein trade openness and financial development are included as additional variables. Empirical evidence confirms the existence of a long-run equilibrium relationship among the competing variables. The results indicate that nonrenewable energy consumption has a long-run significant positive effect on India’s economic growth. In addition, it is shown that a bidirectional causality exists between nonrenewable energy use and economic growth in both the long run and short run. Based on these findings, it is suggested that a nonrenewable energy conservation policy may retard economic growth in India if initiated without due regard to renewable energy sources.

A study of the impact of military expenditures on economic growth and development examines the differences in the results of previous studies which led to contradictory conclusions. The authors find that these differences are due to sample variations, specificational choices, and the different time periods examined. The data indicate that there is no consistent, statistically significant connection between military spending and economic growth. Augmentation of the models suggests that military expenditures neither help nor hurt economic growth to any significant extent. 2 tables.

Purpose: The main objective of the study was to find the relationship between petroleum consumption and economic growth in Kenya.Methodology: A modified Cobb-Douglas production function was used to analyse the relationship between energy consumption and economic growth. In this study, secondary annual time series data covering the period 1980-2009 was used. All variables were expressed in natural logarithms. The data on GDP, population, labor force and private capital and petroleum consumption were collected from the various issues of the annual Kenya Economic surveys and statistical abstracts (1980-2008). Relevant data on petroleum consumption was also obtained from the ministry of Energy.Results: The estimation results of the long-run relationship revealed that the relationship between petroleum consumption and GDP, and private capital and GDP was positive and statistically significant. Estimation of Error-correction model showed that in short run there was a positive and statistically insignificant relationship between GDP and lagged petroleum consumption. Finally, Granger causality tests imply a unidirectional Granger causality running from petroleum consumption to GDP.Unique contribution to theory, practice and policy: Given the long-term positive effects on the economy, the study recommended that an energy growth policy in the petroleum consumption should be adopted in such a way that it stimulates growth in the economy. To encourage petroleum consumption, both supply side and demand side dynamics should be addressed. For instance, the domestic price of petroleum should be reduced to a level that stimulates both household and industry demand. Structural problems such as the lack of proper storage facility that could stabilize prices during petroleum stocks were indeed necessary

This study attempts to investigate the long-run Granger causality relationship between energy consumption, carbon dioxide emission and economic growth in India over the period 1971-2007. The augmented Dickey– Fuller test (ADF), Phillips-Perron test (PP) and KPSS test are used to test for Granger causality in cointegration models which take account of the stochastic properties of the variables. The most important result is that there is feedback causal relationship between energy consumption and economic growth in India which implies that the level of economic activity and energy consumption mutually influence each other; a high level of economic growth leads to a high level of energy consumption and vice versa. The value of the error correction term confirms the expected convergence process in the long-run for carbon emissions and growth in India which

This study examines both the short-run and long-run relationship among information and communication technology (ICT), economic growth and electricity consumption using annual time-series data for India for the period 1991-2014. All the variables under study are I (1) as per Dickey-Fuller-Generalised least square unit root test results. For cointegration test and causality analysis, we have used autoregressive distributive lag (ARDL) bounds test and vector error correction model (VECM) Granger causality test respectively. ARDL test results suggest that ICT stimulates economic growth in the short-run but not in the long-run, whereas electricity consumption has significant and positive impact on economic growth in the long-run and short-run as well, which supports the energy-led growth hypothesis. However, there is no cointegration when electricity consumption becomes a dependent variable and other variables are independent. Economic growth does not Granger cause electricity consumption in the short-run. These findings suggest that India should focus on ICT expansion to accelerate economic growth in short-run and India should not follow energy conservation policies as it might adversely impact economic growth in both short- and long-run. Instead, India should focus on energy efficient policies. This study has crucial policy implications. Hence, proper balance and coordination among ICT policy, energy policy, and economic growth policy are recommended.