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Causality between economic growth and energy consumption in Croatia

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  • Tomislav Gelo

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    (University of Zagreb, Faculty of Economics & Business Zagreb, Croatia)

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    Abstract

    The main goal of the paper is to investigate relation between economic development and energy consumption in Croatia. This paper examines the casual relationship, using Granger test, between gross domestic products (GDP) and total primary energy consumption in Croatia. Analyzed period is from 1953 to 2005. In the paper vector auto-regression model (VAR), Granger causality test and unit root test are used as tools for analysis. Economic and energetic time series usually have the problem of non stationarity series. Non-stationary time series are trying stationarity with differentiation of variables, using co-integration technique. Applying Granger’s causality test in Croatian case, we found that GDP Granger causes total energy consumption not energy consumption Granger causes GDP. The result shows that relationship for Croatia runs from total primary energy consumptions to gross domestic products, not from gross domestic products to primary energy consumption. Conclusion of VAR model is that variable total primary energy consumptions and the constant are not significant in the model and that variable gross domestic products is significant. Base conclusion of the paper is that VAR model evaluation shows that change of GDP of 1% in period t-1 would affect the annual total primary energy consumption for 0,509% in period t.

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    Bibliographic Info

    Article provided by University of Rijeka, Faculty of Economics in its journal Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics.

    Volume (Year): 27 (2009)
    Issue (Month): 2 ()
    Pages: 327-348

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    Handle: RePEc:rfe:zbefri:v:27:y:2009:i:2:p:327-348

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    Related research

    Keywords: GDP; growth; energy; consumption; Granger causality;

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    References

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    1. Perron, P, 1988. "The Great Crash, The Oil Price Shock And The Unit Root Hypothesis," Papers, Princeton, Department of Economics - Econometric Research Program 338, Princeton, Department of Economics - Econometric Research Program.
    2. Lee, Chien-Chiang, 2005. "Energy consumption and GDP in developing countries: A cointegrated panel analysis," Energy Economics, Elsevier, Elsevier, vol. 27(3), pages 415-427, May.
    3. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, Elsevier, vol. 54(1-3), pages 159-178.
    4. Perron, Pierre, 1988. "Trends and random walks in macroeconomic time series : Further evidence from a new approach," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 12(2-3), pages 297-332.
    5. Girod, Jacques & Bourbonnais, Régis & Keppler, Jan Horst, 2007. "The Econometrics of Energy Systems," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/120, Paris Dauphine University.
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    Cited by:
    1. Gurgul, Henryk & Lach, lukasz, 2011. "The role of coal consumption in the economic growth of the Polish economy in transition," Energy Policy, Elsevier, Elsevier, vol. 39(4), pages 2088-2099, April.
    2. Borozan, Djula, 2013. "Exploring the relationship between energy consumption and GDP: Evidence from Croatia," Energy Policy, Elsevier, Elsevier, vol. 59(C), pages 373-381.

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