Abstract
This study has investigated the relationship between energy consumption and economic growth in Brazil during the period of 1980-2008. The co-integration test indicates a long-run equilibrium relationship between variables, andenergy consumption appears to be real GDP elastic. This elasticity suggests that energy consumption has a great positive influence on changes in income. The causality results from the error correction model reveal a unidirectional short-run causality from energy consumption to economic growth and a bidirectional strong causality between them. These findings suggest that Brazil should adopt a dual strategy of increasing investment in energy infrastructure, and stepping up energy conservation policies to reduce any unnecessary waste of energy, in order to avoid having a negative effect on economic growth by reducing energy consumption. In contrast, energy conservation is expected to increase the efficient use of energy and, therefore, enhance economic growth.
Highlights
Energy is the foundation of economic development and constitutes one of the vital infrastructure investments in social development
Fifteen-year, ten-year, and fiveyear growth rates are calculated as the growth between 1993 and 2008, 1998 and 2008, and 2003 and 2008, respectively
In the most recent five years (2003-2008), Brazil has experienced a greater growth rates in both energy use (4.18%) and income (4.81%) than the global growth rates for corresponding variables
Summary
Energy is the foundation of economic development and constitutes one of the vital infrastructure investments in social development. Both economy and energy consumption in Brazil have been growing rapidly. In the recent five years (2003-2008), Brazil has experienced greater growth rates in both energy use (4.18%) and income. How to cite this paper: Pao, H.-T., Li, Y.-Y. and Fu, H.-C. (2014) Causality Relationship between Energy Consumption and Economic Growth in Brazil. (4.81%) than the global growth rates for corresponding variables. The world’s recent five-year growth rates in energy use and real GDP are 2.97% and 3.43%, respectively. Official energy projections for Brazil indicate a continuing increase in demand for energy, in the two decades
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