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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

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.

Suggested Citation

  • Mohammadi, Hassan & Parvaresh, Shahrokh, 2014. "Energy consumption and output: Evidence from a panel of 14 oil-exporting countries," Energy Economics, Elsevier, vol. 41(C), pages 41-46.
    • Handle: RePEc:eee:eneeco:v:41:y:2014:i:c:p:41-46
    DOI: 10.1016/j.eneco.2013.11.002
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    More about this item

    Keywords

    Economic growth; Energy consumption; Cross-sectional dependency; Oil-exporting countries;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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