The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries

Abstract

This paper estimates the causal relationships between energy consumption and income for India, Indonesia, the Philippines and Thailand, using cointegration and error-correction modelling techniques. The results indicate that, in the short-run, unidirectional Granger causality runs from energy to income for India and Indonesia, while bidirectional Granger causality runs from energy to income for Thailand and the Philippines. In the case of Thailand and the Philippines, energy, income and prices are mutually causal. The study results do not support the view that energy and income are neutral with respect to each other, with the exception of Indonesia and India where neutrality is observed in the short-run.