ENERGY CONSUMPTION AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM MENA REGION

Najia Saqib

doi:10.32479/ijeep.11931

Abstract

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

Highlights

The relationship between energy consumption and economic growth has been the subject of considerable academic research over the past few decades
The idea of causal relationship between energy consumption and economic growth was pioneering by Kraft and Kraft (1978) for the period 1947-1974 by employing causality test for examined the relationship between these variables for USA, Granger causality test approach has become a popular tool for studying the relationship between economic growth and energy consumption in different countries, e.g. Stern (1993), Belloumi (2009), Pao (2009) and Ghosh (2010)
We examined the relationship between energy consumption and real GDP of the fourteen MENA Countries over the period 19872019 by using bivariate Vector Auto-regression model and Granger causality approach

Summary

INTRODUCTION

The relationship between energy consumption and economic growth has been the subject of considerable academic research over the past few decades. Altinay and Karagol (2004) investigated the causal relationship between energy consumption and economic growth in Turkey over the period of 1950-2000. They showed that both used tests have yielded a strong evidence for unidirectional causality running from the energy consumption to economic growth. This implies that energy consumption is vitally important to sustain economic growth in Turkey. Study determining the causal relationship between energy consumption and economic growth and proposed appropriate policies to promote energy preservation in MENA countries.

LITERATURE REVIEW

MODELLING FRAMEWORK AND RESULTS

CONCLUSION AND POLICY RECOMMENDATIONS