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An Investigation of the Causal Relationship between Energy Consumption and Economic Growth: A Case Study of Vietnam

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  • Xuan Hoi Bui

    (Department of Industrial Economics, Hanoi University of Science and Technology, Vietnam.)

Abstract

This article investigates the causal links between economic growth and energy consumption in Vietnam by using Vietnam s updated data in the period of 1984-2016. The error correction mechanism (ECM) is employed to detect the causal relationship in the presence of co-integration between two variables. Applying Granger s causality test within an error-correction modeling technique, we find long-run bidirectional Granger causality between energy consumption and economic activities. The source of causation in the long-run is found by the significance of the error correction terms in both directions. In the short-run, the unidirectional Granger causality running from energy consumption to economic growth is also observed. The findings provide implications for energy development strategy to ensure the sustainable economic growth in the long term for Vietnam - a rapid developing country in ASEAN region.

Suggested Citation

  • Xuan Hoi Bui, 2020. "An Investigation of the Causal Relationship between Energy Consumption and Economic Growth: A Case Study of Vietnam," International Journal of Energy Economics and Policy, Econjournals, vol. 10(5), pages 415-421.
    • Handle: RePEc:eco:journ2:2020-05-48
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    Cited by:

    1. Oleg ANDREEV & Oksana LOMAKINA & Ariadna ALEKSANDROVA, 2021. "Diversification Of Structural And Crisis Risks In The Energy Sector Of The Asean Member Countries," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 149-160, June.

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    More about this item

    Keywords

    Energy; Economic growth; Granger s causality test; ECM; Vietnam.;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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