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Energy consumption and output: Evidence from a panel of 14 oil-exporting countries

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  • Mohammadi, Hassan
  • Parvaresh, Shahrokh
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    Abstract

    We examine the long-run relation and short-run dynamics between energy consumption and output in a panel of 14 oil-exporting countries over 1980–2007. Panel unit root tests, which account for common cross-sectional factors, fail to reject non-stationarity in both variables. Thus, we explore their long-run relation and short-run dynamics using three alternative panel estimation techniques — dynamic fixed effect, pooled and mean-group estimators before and after accounting for common cross-sectional factors. These estimators allow for various degrees of heterogeneity in long-run parameters and short-run dynamics. The results based on the mean group estimator with common correlated effects suggest (a) a stable relation between energy consumption and output; (b) bi-directional causality in both long- and short-run; and (c) the robustness of the long-run causality results to the inclusion of additional variables. As such, environmental policies designed to curtail energy may have significant long-run ramifications for economic growth, and policies designed to promote economic growth may have adverse environmental consequences.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 41 (2014)
    Issue (Month): C ()
    Pages: 41-46

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    Handle: RePEc:eee:eneeco:v:41:y:2014:i:c:p:41-46

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    Web page: http://www.elsevier.com/locate/eneco

    Related research

    Keywords: Economic growth; Energy consumption; Cross-sectional dependency; Oil-exporting countries;

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    Cited by:
    1. Firouz Fallahi & Mohammad Karimi & Marcel-Cristian Voia, 2014. "Are Shocks to Energy Consumption Persistent? Evidence from Subsampling Confidence Intervals," Carleton Economic Papers 14-02, Carleton University, Department of Economics.

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