Consumption Economic Growth Nexus Research Articles

Does energy consumption play a key role? Re-evaluating the energy consumption-economic growth nexus from GDP growth rates forecasting

Given the strong link between economic growth and energy consumption, we construct a new set of energy consumption indices (ECI) to forecast GDP growth rates. The findings demonstrate the strong predictive power of the new indices. In particular, the electricity consumption index from the industrial sector has an excellent predictive performance and deserves the attention of the government and academia to help formulate economic growth targets. The mixed-frequency model with the Least Absolute Shrinkage and Selection Operator approach (MIDAS-LASSO) enables the full exploitation of energy consumption information for stable forecasting performance, even in the context of crisis fluctuations and geopolitical risk shocks. Furthermore, we apply forecast encompassing tests and variable selection to statistically investigate the predictive information. By analyzing energy consumption characteristics, we contribute to the economic growth hypothesis at the level of energy consuming sectors and provide new insights into GDP forecasting.

The Energy Consumption-Economic Growth Nexus in Nigeria: What Evidence Exists?

The study investigated the energy consumption-economic growth nexus in Nigeria. Specifically, the study aimed to establish a comprehensive understanding of the nexus and causality between the variables in Nigeria. The study’s significance is highlighted in the context of various energy policies implemented in Nigeria, including the elimination of fuel subsidies. In order to accomplish the goals of this research, data spanning the period 1980 to 2022 were utilised in the study. Additionally, various econometric techniques, including the autoregressive distributed lag (ARDL) technique and the causality test, were adopted in order to estimate the relationship and causality between the variables. This approach has several advantages especially given variables that were integrated of order, I(0), I(1) or the combination of both. The method used in this study is also extremely resilient in establishing a strong and uninterrupted correlation between variables. The results of the research uncovered various important discoveries, one of which highlights the presence of a lasting connection between energy consumption and economic growth in Nigeria. Specifically, the study showed the presence of co-integration between energy consumption and economic growth. The study also demonstrated that in the event of an economic shock or destabilisation, the economy will take a relatively longer time period to re-establish equilibrium. Additionally, the outcomes of the study implied that energy consumption had a short- and long-term beneficial influence on growth. The study therefore suggested the implementation of an effective energy strategy that promotes sustainable consumption, so facilitating a prompt return to equilibrium in the event of an economic shock. The study showed novelty in that, unlike previous studies in Nigeria which has placed more emphasis on the impact or the effect of energy consumption on economic growth, it examined both the short- and long-run nexus, as well as the causality among the variables. This importance of the study cannot be overemphasised given the structural imbalances in Nigerian energy sector.

Renewable Energy Consumption-Economic Growth Nexus in Saudi Arabia: Evidence from a Bootstrap ARDL Bounds Testing Approach

The paper investigates the relationship between Saudi economic growth, renewable energy consumption and trade openness during the 1980-2017 period. By using the Bootstrap Autoregressive Distributed Lag (BARDL) approach and the Granger causality analysis, the results prove the existence of a cointegration relationship between the considered variables. In order to test for Granger causality in the presence of cointegration among the variables, the results indicate that there is a short-run unidirectional causality running from GDP to trade openness. Thus, a bidirectional causality is detected both between (REC-TOP) and between (PIB-REC). In contrast, in the long run, there is a one-way causal relationship running from renewable energy consumption, trade openness to economic growth. These new findings will help policymakers and government officials better understand the role of renewable energy and economic growth in Saudi Arabia's development.

Does Energy Consumption Play a Key Role? Re-evaluating the Energy Consumption-Economic Growth Nexus From GDP Growth Rates Forecasting

Does Energy Consumption Play a Key Role? Re-evaluating the Energy Consumption-Economic Growth Nexus From GDP Growth Rates Forecasting

A strengthened relationship between electricity and economic growth in China: An empirical study with a structural equation model

Many empirical studies have examined the causal relationship between electricity consumption and economic growth. Given the significant role of China in global economic growth and electricity use, this study analyzes the multiple causal mechanisms underlying the electricity consumption-economic growth nexus in China using a structural equation model and comparing the nexus with national-level data from 1978 to 2019. This study contributes to the understanding of the direct and indirect causal mechanisms between the electricity consumption-economic growth nexus. We find: (1) the nexus has strengthened with time, and the direct and indirect effects from electricity consumption to economic growth have also increased with time; (2) indirect influences of electricity consumption on economic growth are stronger than the direct influence; and (3) increasing ecological awareness brought about by economic growth increases the demand for electricity generation from clean energy sources. Therefore, the Chinese government should formulate policies to facilitate high-quality electricity production to meet the increasing demand from economic growth.

A survey of literature on energy consumption and economic growth

This study is a meta-analytic investigation of energy consumption and economic growth. It makes a literature survey on the dynamic causal relationship between broad variables of energy and economic growth for the period 1974–2021. The objective of this study is to investigate stationarity, cointegration and direction of causality between energy consumption and economic growth. It uses survey methods to profile related literature of the energy consumption–economic​ growth nexus. It tests four established hypotheses, feedback, growth, conservation and neutrality. It concentrates on both country as well as multi-country panel based studies. The variables chosen, econometric as well as theoretical models, time periods has contributed to the increased level of disagreement. The results are thoroughly mixed with no agreement, some studies are explicit on the degree to which results are contentious. There is no consensus for both country specific as well as panel based studies. On the whole the growth hypothesis is the most dominant outcome for country based studies. Our findings indicate that this debate is inconclusive with growth hypothesis accounting for 43.8%, feedback 18.5%, conservation 27.2%, and neutrality hypothesis 10.5% for country specific studies. This study gives a footprint of the state of the art and stimulates the level of debate for researchers on energy consumption and economic growth.

Re-evaluating the asymmetric conventional energy and renewable energy consumption-economic growth nexus for Pakistan.

To understand the nexus between economic growth and energy sources, in this study, we have selected Pakistan and collected data over the period 1980-2016. The neoclassical production function of Pakistan is augmented with conventional and renewable energy, capital, and labor. Conversely, the conventional and renewable models are being constructed by using GDP as an independent variable. This paper applied linear and nonlinear ARDL models to see whether the influence of conventional and renewable energy consumption on GDP per capita of Pakistan is symmetric or asymmetric and vice versa. Furthermore, the asymmetric causal effects between the energy variables and economic growth are also discussed. From the findings of the study, we deduce the long-run asymmetric effects of renewable energy on the economic growth of Pakistan. Similarly, the asymmetric effects of GDP, in the long run, are confirmed in both energy models. The symmetric and asymmetric causality results have recommended growth and conservation hypothesis. The findings propose that renewable energy is a significant factor in boosting the economic growth of Pakistan and a decline in the use of renewable energy could actually stem the economic growth of Pakistan.

Energy consumption–economic growth nexus within the purview of exogenous and endogenous dynamics: evidence from Bangladesh

AbstractThis paper investigates the nexus between energy consumption and economic growth in Bangladesh over the period 1971–2018 using the autoregressive distributed lag (ARDL) approach to cointegration. The main contribution of this study is the inclusion of exogenous dynamic (globalisation) and endogenous factor (political risk indicator measured by political terror scale (PTS)) to the energy consumption–economic growth nexus. The study explores an energy consumption–economic growth nexus where globalisation and PTS have both positive and negative influences on this relationship in the short run and long run. The Toda–Yamamoto Granger causality test confirms the feedback hypothesis, that is bidirectional causal relationship between energy consumption and economic growth, and the result is further verified by the impulse response function. Therefore, policymakers should enhance the availability of energy for people and industries to continue the existing momentum of economic growth. Besides, the government should cautiously deal with both the globalisation and political risk issues about energy consumption–economic growth nexus in Bangladesh.

Revisiting oil consumption-economic growth nexus: Resource-curse and scarcity tales

This study opens up a new insight into the link between energy (oil) consumption and economic growth by considering the influence of natural resources endowments. In order to account for heterogeneity and non-stationarity, the dynamic heterogeneous panel estimators within the framework of panel ARDL model are employed. Alternative estimators (AMG and panel threshold regression) are additionally used to check the sensitivity of the results to other long-run estimators and to account for threshold effect in the nexus.Findings from the baseline model reveal that economic growth of the resource-rich countries negatively responds to oil consumption in the long-run, although the short-run impact is positive. On the other hand, oil consumption fails to have significant effect on economic growth in both short-run and long-run in the resource-poor countries. The AMG estimator shows insignificance in all cases thus largely supporting the results of the baseline model. Amidst negligible instances of positive coefficients at certain threshold levels, the negative coefficients in most cases under the threshold regression model still suggest that oil consumption poorly affects growth in both country groups. Based on these findings therefore, the resource-rich countries are said to be faced with the problem of resource curse, while the resource-poor countries are challenged with scarcity of the energy resources.

A nonparametric analysis of energy environmental Kuznets Curve in Chinese Provinces

Energy resources are an important material foundation for the survival and development of human society, and the relationship between energy and economy is interactive and complementary. This paper analyzes the energy consumption–economic growth nexus in Chinese provinces using novel and recent nonparametric time-series as well as panel data empirical approaches. The dataset covers 30 provinces over the period of 1980-2018. The empirical analysis indicates the presence of a nonlinear functional form and smooth structural changes in most of the provinces. The nonparametric empirical analysis validates the presence of a nonlinear unit root problem in energy consumption and economic growth, and nonlinear cointegration between the variables. Additionally, the nonparametric panel cointegration test reports evidence of convergence in energy consumption and economic growth patterns across the provinces. The nonparametric regression analysis finds economic growth to have a positive effect, on average, on energy consumption in all provinces, except for Beijing. Further, the energy environmental Kuznets curve exists between economic growth and energy consumption in 20 out of 30 Chinese provinces. The Granger causality analysis reveals the presence of a mixed causal relationship between economic growth and energy consumption. The empirical findings have important implications for Chinese authorities in planning for improving energy efficiency, decoupling between economic growth and energy consumption, and reducing the environmental footprint of provinces.

Electricity Consumption–Economic Growth Nexus: Evidence from ARDL Bound Testing Approach in the Tunisian Context

This article investigates the causal nexus between electricity consumption and economic growth in Tunisia for the period 1971–2013 by using autoregressive distributed lag (ARDL) bounds testing approach of cointegration and Granger causality tests. The empirical findings indicate the existence of a long-term relationship between electricity consumption and economic growth. Besides, they support the conservation hypothesis in the long run, while they confirm the growth hypothesis in the short run.

A road to enhancements in natural gas use in Iran: A multivariate modelling approach

The primary focus of this study is to empirically investigate the natural gas consumption-economic growth nexus in Iran, while incorporating real gross fixed capital formation (GFCF) and the role of oil revenue (OR) as additional variables to make it a multivariate framework in order to avoid possible omission variable bias in the estimations. To this end, quarterly frequency data from 1990Q1 to 2017Q4. Structural break point unit root test like Zivot and Andrews is employed and complemented with traditional non-stationarity tests such as Augmented Dickey Fuller and Phillips and Perron unit tests to investigate the interest variables stationarity characteristics. Recently developed Bayer and Hanck (2013) combined cointegration test is used alongside the Pesaran et al. (2001) bounds testing cointegration to test for long-run relationship among the variables. Finally, we test for causal relationships through Modified Wald test of Tada-Yamamoto (1995) Granger causality tests is employed. Empirical findings show cointegration relationship between the variables while accounting for structural break. Further piece of empirical results suggest that natural gas consumption exerts a significant positive impact on economic output in Iran, and also that there is a one-way causality from natural gas consumption to economic output. Thus, our study corroborates the natural gas-led growth hypothesis; being natural gas consumption a suitable alternative, as a complementary green energy source (IGU, 2015). One important conclusion reached in our study is that there is need for energy portfolio diversification in Iran in order to attain full gains from the energy sector, reducing other energies' emissions. Further insights are elucidated in the main text. Our findings provide policymakers useful insight into the state of the energy sector in Iran.

Investigation of energy consumption–Economic growth nexus: A note on MENA sample

Investigation of energy consumption–Economic growth nexus: A note on MENA sample

Does Sectoral Composition of Trade Matter for Trade-Energy-Growth Nexus? A VAR/VEC Based Analysis for China in the Presence of Structural Change

This study identifies the differential effect of sectoral composition of trade on trade-energy consumption–economic growth nexus for China from 1992–2015. We divided trade into five broad sectors—high tech (HT), medium tech (MT), low tech (LT), primary products (PP), and resource-based products (RB)—based on technology intensity. VAR and VEC models are applied depending on time series properties and cointegration among the variables. The study finds that trade in different sectors has differential effects on growth and energy consumption. It is also evident that LT and PP trade do not have long-run cointegration with growth and energy consumption, whereas the opposite is true for MT, HT, and RB trade. Regarding growth-energy nexus, the study defends the conservation hypothesis for China. Growth and energy cause LT and PP trade in the short run only, whereas they only cause MT trade in the long run. Trade in HT, MT, and RB sectors strong cause growth but not energy consumption. This study inter alia suggests that to reduce energy consumption while maintaining higher economic growth China should provide greater focus on HT, MT, and RB sectors.

Renewable and non-renewable energy consumption-economic growth nexus: New evidence from South Asia

This study explores the relationship between renewable and non-renewable energy consumption and economic growth for a panel of five South Asian countries over the period of 1990–2014. To see the long-run co-integration between the variables, the study applies Pedroni (1999, 2004) and Kao (1999) tests. The long-run equilibrium relationship is determined using panel Fully Modified Ordinary Least Squares and panel Dynamic Ordinary Least Squares estimation techniques. Dumitrescue-Hurlin (2012) panel causality test is used to see the causal links between the variables. The study finds positive impacts of renewable and non-renewable energy consumption and fixed capital formation on economic growth. Ceteris paribus, a 1% increase in renewable energy consumption, non-renewable energy consumption and capital increased economic growth by 0.66%. 0.10% and 0.58%, respectively. It is also revealed that there is a unidirectional causality running from economic growth to renewable energy consumption. As per the obtained results, the conservation hypothesis is valid for the South Asian countries.

THE ENERGY-GROWTH NEXUS WITHIN OIL PRODUCTION AND OIL RENTS CONTEXT

The per capita primary energy consumption-economic growth nexus is examined in a panel of oil-producing countries over a long period (1970-2015), controlling for the exports of goods and services, the ratio of oil production to oil consumption, the oil rents, and international crude oil prices. It is confirmed that these countries share common spatial patterns, unobserved common factors, or both. A dynamic Driscoll-Kraay estimator, with fixed effects, is used to cope with the heteroskedasticity, contemporaneous correlation, first-order autocorrelation, and cross-sectional dependence. Results prove that energy consumption drives economic growth, but only on the short-run. The ratio of oil production to oil consumption has exerted a positive impact on growth in both the short- and long-run. Oil prices only exert a positive effect on growth in the short-run. Oil rents depress growth, suggesting that oil is more a curse than a blessing for the economies.

The Effect of Renewable Energy Consumption on Sustainable Economic Development: Evidence from Emerging and Developing Economies

The objective of the paper is to figure out the nexus between renewable energy consumption and sustainable economic development for emerging and developing countries. In this paper, a panel of 30 emerging and developing countries is selected using the World Development Indicators (WDI) of the World Bank, Renewable Energy Country Attractiveness Index (RECAI) by Ernst and Young, and a random selection method based on the current trend of renewable energy consumption for five different regions of the world i.e., Asia, South-Asia, Latin America, Africa and the Caribbean. To achieve the objective, robust panel econometric models such as the Pesaran cross-section dependence (CD) test, second generation panel unit root test, e.g., cross-sectional augmented IPS test (CIPS) proposed by Pesran (2007), panel co-integration test, fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) are applied to check the cross-sectional dependence, heterogeneity and long-term relationship among variables. The panel is strongly balanced and the findings suggest a significant long-run relationship between renewable energy consumption and economic growth for selected South Asian, Asian and most of the African countries (Ghana, Tunisia, South Africa, Zimbabwe and Cameroon). But for the Latin American and the Caribbean countries, economic growth depends on non-renewable energy consumption. Renewable energy consumption in the selected countries of these two regions are still at the initial stage. In case of the renewable energy consumption and CO 2 emissions nexus, for selected South Asian, Asian, Latin American and African countries both GDP and non-renewable energy consumption cause the increase of CO 2 emissions. For the Caribbean countries only non-renewable energy consumption causes the increase of CO 2 emissions. An important finding regarding renewable energy consumption-economic growth nexus indicates the existence of bi-directional causality. This supports the existence of a feedback hypothesis for the emerging and developing economies. In the case of renewable energy consumption- CO 2 emissions nexus, there exists unidirectional causality. This supports the existence of the conservation hypothesis, where CO 2 emissions necessitates the renewable energy consumptions. Based on the findings, the study proposes possible policy options. The countries, who have passed the take-off stage of renewable energy consumption, can take advanced policy initiatives e.g., feed-in tariff, renewable portfolio standard and green certificate for long-term economic development. Other countries can undertake subsidy, low interest loan and market development to facilitate the renewable energy investments.

Renewable energy consumption-economic growth nexus in emerging countries: A bootstrap panel causality test

In this study, we analyzed the relationship between renewable energy consumption and economic growth in 17 emerging countries, spanning the period of 1990–2016. The bootstrap panel causality test, allowing for dependence across countries and heterogeneity in slope parameters, developed by Kónya (2006) [1] was employed. The results indicated that the neutrality hypothesis does hold for all of the markets studied except for Poland, which confirmed the growth hypothesis. As such, because of the nonexistence of causality running from renewable energy demand to economic growth, energy saving (mitigation) policies do not have any detrimental influence on the growth rates of these 16 emerging economies. For Poland; however, energy conservation policies may have detrimental effects on the country's economic performance level.

Renewable and non-renewable electricity consumption–economic growth nexus: Evidence from OECD countries

In this study, the relationship between renewable and non-renewable electricity consumption and economic growth was examined using data from the 1980–2015 period for 26 OECD countries. The relationship between the variables was examined using two different panel causality approaches in order to make a comparison. Time domain Granger causality tests cannot examine the causality relation at different frequencies. However, frequency domain Granger causality tests examine the causality at different frequencies. While Dumitrescu-Hurlin (2012) panel causality test is time domain causality test, the causality test developed by Croux and Reusens (2013) is the frequency domain causality test. According to the Dumitrescu-Hurlin panel causality test results, bidirectional causality has been determined between non-renewable electricity consumption and economic growth. On the contrary, the Croux and Reusens test results show that there is a bidirectional temporary, and permanent causality between economic growth and renewable-non-renewable electricity consumption. According to this results, for 26 OECD countries, where the feedback hypothesis is valid, policies need to be assessed not only in terms of economic growth, but also in terms of improving electricity energy supply security and environmental quality. Finally, policy-makers should promote the renewable electricity consumption to ensure energy security, reduce energy dependence, and encourage economic growth.

Addressing the energy consumption-economic growth nexus: The Nigerian case

Energy is critical to the survival and expansion of any economy. In Nigeria, energy consumption has been skewed towards household use, and below thresholds for sector-driven growth. The article updates, in time and methodology, those studies highlighting the significance of energy use for economic growth, using the Bound test and the Auto Regression Distributed Lag (ARDL) to establish the long- and short-run relationships between disaggregated energy consumption and economic growth in Nigeria from 1990 to 2016. The variables considered are real GDP, energy consumption decomposed into electricity and petroleum consumption, labour and capital. The findings show that, in the short and long run, petroleum consumption and labour have a significant positive relationship with GDP. Furthermore, the causality results show that feedback causation between economic growth and energy consumption as well as labour exists, while one-way causation runs from labour to economic growth. The study recommends diversification of the power-generation portfolio in the country, as this will improve energy consumption. Also, full deregulating policies in the energy sector would encourage industrialization and move energy demand towards increasingly productive uses. Finally, a strong institutional framework is needed to ensure energy policies achieve their objectives and targets. Keywords : Energy Consumption, Economic Growth, Industrialization, Error Correction.