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Economic Growth and Electricity Consumption in 12 European Countries: A Causality Analysis Using Panel Data

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Author Info
Aitor Ciarreta Antuñano () (Dpto. de Fundamentos del Análisis Económico II (UPV/EHU))
Ainhoa Zarraga Alonso () (Dpto. de Economía Aplicada III (UPV/EHU))

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Abstract

We apply recent panel methodology to investigate the relationship between electricity consumption and real GDP for a set of 12 European Union countries using annual data for the period 1970-2004. Recently developed tests for panel unit roots, cointegration in heterogeneous panels and panel causality are employed. The results show a long-run relationship between the series. We estimate this relationship and test for causality. We find no short-run causality in any direction. These results might help to design appropriate electricity consumption policies in the sample countries, as well as investment policies in interconnections to build a single European market for electricity.

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Publisher Info
Paper provided by Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística) in its series BILTOKI with number 200804.

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Date of creation: 05 Nov 2008
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Handle: RePEc:ehu:biltok:200804

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Postal: Dpto. de Econometría y Estadística, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
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Related research
Keywords: Electricity consumption; economic growth; panel cointegration; panel causality;

Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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    Other versions:
  3. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-70, Special I. [Downloadable!] (restricted)
  4. Soytas, Ugur & Sari, Ramazan, 2003. "Energy consumption and GDP: causality relationship in G-7 countries and emerging markets," Energy Economics, Elsevier, vol. 25(1), pages 33-37, January. [Downloadable!] (restricted)
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  8. Altinay, Galip & Karagol, Erdal, 2005. "Electricity consumption and economic growth: Evidence from Turkey," Energy Economics, Elsevier, vol. 27(6), pages 849-856, November. [Downloadable!] (restricted)
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    Other versions:
  10. Lee, Chien-Chiang & Chang, Chun-Ping, 2007. "Energy consumption and GDP revisited: A panel analysis of developed and developing countries," Energy Economics, Elsevier, vol. 29(6), pages 1206-1223, November. [Downloadable!] (restricted)
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    Other versions:
  13. Lee, Chien-Chiang, 2005. "Energy consumption and GDP in developing countries: A cointegrated panel analysis," Energy Economics, Elsevier, vol. 27(3), pages 415-427, May. [Downloadable!] (restricted)
  14. Al-Iriani, Mahmoud A., 2006. "Energy-GDP relationship revisited: An example from GCC countries using panel causality," Energy Policy, Elsevier, vol. 34(17), pages 3342-3350, November. [Downloadable!] (restricted)
  15. 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, vol. 54(1-3), pages 159-178. [Downloadable!] (restricted)
    Other versions:
  16. Huang, Bwo-Nung & Hwang, M.J. & Yang, C.W., 2008. "Causal relationship between energy consumption and GDP growth revisited: A dynamic panel data approach," Ecological Economics, Elsevier, vol. 67(1), pages 41-54, August. [Downloadable!] (restricted)
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