Abstract
Current study aimed to explore the nexus between energy and economic growth in post-communist nations during 1995-2014. As an empirical model, the growth model is employed including economic complexity indicator as a measure of capabilities for exporting sophisticated products. We employ Pedroni's (1999) panel cointegration tests and Panel Dynamic OLS estimation to assess the long-term link between the variables. At 1% significance level, we confirm cointegration between energy consumption and economic growth. Panel Dynamic OLS results revealed that economic growth positively influences energy consumption in Post-Communist states. The Dumotrescu and Hurlin (2012) panel Granger causality test results discovered unidirectional causality running from economic growth to energy consumption. Economic growth causes energy consumption in post-communistic countries, confirming the conservation hypothesis.Keywords: energy, growth, Post-CommunistJEL Classifications: C23, O47, Q40DOI: https://doi.org/10.32479/ijeep.10003
Highlights
Related studies on the nexus between energy and growth is grounded on several different premises: the growth hypothesis, the conservation hypothesis, the feedback hypothesis, and the neutrality hypothesis
The results suggest that in the short-term, GDP growth has an effect on energy consumption, while energy consumption is causal to economic growth in the long-term
The causal link between energy consumption and economic growth is explored for a group of post-communist countries covering the period 1995 and 2014 and utilizing the Pedroni cointegration and panel Granger causality test
Summary
Related studies on the nexus between energy and growth is grounded on several different premises: the growth hypothesis, the conservation hypothesis, the feedback hypothesis, and the neutrality hypothesis. Using the time division of two periods, 1978-1992 and 1991-2016, the authors identify a strong dependence of the Chinese economy on energy consumption in favor of the growth hypothesis These findings are proved by a co-integration test and error correction model. The results suggest that in the long-term, there is bi-directional causality between energy consumption and GDP per capita, while in the short-term conservation policies may harm economic growth in these developing markets. The results of the Granger causality and panel cointegration test, conducted by Narayan and Smyth (2008) within the G7 countries, identify shortand long-term nexuses between economic growth and energy consumption supporting the growth hypothesis. The results of our paper show that, overall there are unidirectional relationships between economic growth and energy consumption in favor of the conservation hypothesis in 26 countries for the period from 1995 to 2014. The rest of this study is structured as follows: Section 2 discusses data and methods; Section 3 offers empirical results; Section 4 concludes the manuscript
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