Economic growth and energy consumption revisited — Evidence from linear and nonlinear Granger causality

Chiou-Wei, Song Zan; Chen, Ching-Fu; Zhu, Zhen

doi:10.1016/j.eneco.2008.02.002

Cited by 353 publications

(160 citation statements)

References 26 publications

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“…In addition, Belloumi (2009), Fallahi (2011 and Fuinhas and Marques (2012) document an existence of bidirectional causality or a validation of the feedback hypothesis between energy consumption and economic growth. Mixed results are also found in recent studies of energy economics literature , Lee 2006, Chiou-Wei et al 2008 1 . In Next-11 countries, Yildirim et al (2014) examined the causality between energy consumption and economic growth by using a bootstrapping autoregressive metric causality test.…”

Section: Studies On the Nexus Between Energy Consumption And Economicmentioning

confidence: 47%

Time-varying analysis of CO2 emissions, energy consumption, and economic growth nexus: Statistical experience in next 11 countries

et al. 2016

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This paper detects the direction of causality among carbon dioxide (CO 2 ) emissions, energy consumption, and economic growth in Next 11 countries for the period 1972-2013. Changes in economic, energy, and environmental policies as well as regulatory and technological advancement over time, cause changes in the relationship among the variables. We use a novel approach i.e. time-varying Granger causality and find that economic growth is the cause of CO 2 emissions in Bangladesh and Egypt. Economic growth causes energy consumption in the Philippines, Turkey, and Vietnam but the feedback effect exists between energy consumption and economic growth in South Korea. In the cases of Indonesia and Turkey, we find the unidirectional time-varying Granger causality running from economic growth to CO 2 emissions thus validates the existence of the Environmental Kuznets Curve hypothesis, which indicates that economic growth is achievable at the minimal cost of environment. The paper gives new insights for policy makers to attain sustainable economic growth while maintaining long-run environmental quality.

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Section: Studies On the Nexus Between Energy Consumption And Economicmentioning

confidence: 47%

Time-varying analysis of CO2 emissions, energy consumption, and economic growth nexus: Statistical experience in next 11 countries

et al. 2016

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“…However, Alzahrani et al [15] apply the causality test to the residuals of the VAR models fitted to the future and spot prices and use daily future prices as well as futures contracts with different maturity periods (one, two, three, and four months). On the other hand, the nonlinear causality test used by Alzahrani et al tends to detect causality too often (Shu and Zhang [42]) and ours is a little conservative (Wolski and Diks [43], Chiou-Wei et al [44]). Therefore, we do not expect our results to be identical to those of [15].…”

Section: Discussionmentioning

confidence: 99%

Analyzing Crude Oil Spot Price Dynamics versus Long Term Future Prices: A Wavelet Analysis Approach

Polanco-Martínez

Abadie

2016

Energies

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Abstract:The West Texas Intermediate (WTI) spot price shows high volatility and in 2014 and 2015 when quoted prices declined sharply, long-term prices in future markets were less volatile. These prices are different and diverge depending on how they process fundamental and transitory factors. US tight oil production has been a major innovation with significant macroeconomic effects. In this paper we use WTI spot prices and long-term futures prices, the latter calculated as the expected value with a stochastic model calibrated with the futures quotes of each sample day. These long-term prices are the long-term equilibrium value under risk neutral measurement. In order to analyze potential time-scale relationships between spots and future, we perform a wavelet cross-correlation analysis using a novel wavelet graphical tool recently proposed. To check the direction of the causality, we apply non-linear causality tests to raw data and log returns as well as to the wavelet transform of the spot and futures prices. Our results show that in the spot and futures markets for the period 24 February 2006-2 April 2016 there is a bi-directional causality effect for most time scales (from intra-week to biannual). This suggests that spot and futures prices react simultaneously to new information.

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“…Furthermore, no study has investigated the nonlinear and asymmetric causality between economic growth and energy consumption in India, although this gap may exist because of the complexity of the causal mechanism between these variables. Following Chiou-Wei et al (2008), this complexity can be explained by economic events and regime changes, such as changes in the economic environment and changes in energy policies and energy prices. In the following subsection, the same statement will be addressed in the literature regarding the linkage between financial development and energy consumption.…”

Section: Feedback Hypothesis (Growth ↔ Energy)mentioning

confidence: 99%

Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis

et al. 2017

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This paper investigates the asymmetric relationship between energy consumption and economic growth by incorporating financial development, capital and labour into a production function covering the Indian economy from 1960Q 1 -2015Q 4 . The nonlinear autoregressive distributed lag bounds testing approach is applied to examine the asymmetric cointegration between the variables. An asymmetric causality test is also employed to examine the causal association between the considered variables. The results indicate cointegration between the variables in the presence of asymmetries. The asymmetric causality results show that only negative shocks in energy consumption have impacts on economic growth. In the same vein, only negative shocks in financial development have impacts on economic growth. By contrast, symmetrically, capital formation causes economic growth. Finally, over the study period, a neutral effect exists between the labour force and economic growth in India. The implications of these results for growth policies in India are also discussed.Keywords: Financial Development, Energy, Growth, India, Asymmetries JEL classification: O13 Acknowledgements: We would like to thank the editor, Professor Richard Tol (University of Sussex, Brighton, UK), as well as the three anonymous reviewers, for their valuable comments and suggestions that helped us improve our paper significantly. We also thank the participants at the 7 th International Research Meeting in Business and Management (IPAG, Nice, France, 11-12 July 2016). We are also grateful to Jawad Kazmi for his technical assistance. The authors' are responsible for any remaining errors or shortcomings. IntroductionThis study uses quarterly data to investigate the relationship between energy consumption and economic growth in India over the 1960-2015 period. Financial development (measured by domestic credit to the private sector), 1 capital formation and labour force 2 are also included in the Cobb-Douglas production function. This study's main contribution to the existing literature on the energy-growth nexus concerns its examination of the potential asymmetric relationship between the variables. Taking this asymmetry into account is important because a positive or negative variation on one variable does not have the same impact on the other variable. The existence of an asymmetric relationship between two variables can be caused by numerous factors, one of which concerns the complexity of economic systems and the mechanisms that generate the variables under study. This complexity may induce various channels through which one variable affects another. In our case, the relationship between energy consumption and economic growth has been found to be very complex because previous studies have shown four possible impact channels: the growth, conservative, feedback and neutrality hypotheses. 3 On the one hand, the relationship between energy consumption and financial development can also be very complex because numerous impact channels can exist between them...

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Economic growth and energy consumption revisited — Evidence from linear and nonlinear Granger causality

Cited by 353 publications

References 26 publications

Time-varying analysis of CO2 emissions, energy consumption, and economic growth nexus: Statistical experience in next 11 countries

Time-varying analysis of CO2 emissions, energy consumption, and economic growth nexus: Statistical experience in next 11 countries

Analyzing Crude Oil Spot Price Dynamics versus Long Term Future Prices: A Wavelet Analysis Approach

Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis

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