Does energy consumption fuel economic growth in India?
AbstractThe paper examines whether energy use drives economic growth or vice versa in the Indian context during the period 1970-71 to 2004-05. Utilizing the Granger causality test, the study suggests that it is the economic growth that fuels more demand for both crude oil and electricity consumption and it is the only growth of coal consumption that drives economic growth. When influence of different components of energy on major two components of economic growth is investigated with the same causality test, none of the energy components found to be significantly influencing the two components of economic growth viz. private consumption and private investment. In contrast, the out of sample forecasts in the variance decomposition analysis of Vector Autoregression (VAR) suggests that there could be a bi-directional influence between electricity consumption and economic growth, other results remaining unchanged. Therefore, the study yields mixed and contradictory result as compared to the previous studies in the Indian context. However, on the basis of application of two econometric tools, the study with little more conviction could suggest for reducing crude oil and natural gas consumption at least in the consumption sectors which don't directly contribute to production or add to the capital formation of the economy, for achieving higher rate of growth in the economy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for Development Studies, Trivendrum, India in its series Centre for Development Studies, Trivendrum Working Papers with number 388.
Length: 61 pages
Date of creation: Sep 2007
Date of revision:
Energy Consumption; Economic Growth; Granger Causality; VAR & India;
Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dibyendu S. Maiti, 2005.
"Organisational morphology of rural industries in liberalised India: A study of West Bengal,"
Centre for Development Studies, Trivendrum Working Papers
371, Centre for Development Studies, Trivendrum, India.
- Dibyendu S. Maiti, 2006. "Organisational Morphology of Rural Industries in Liberalised India: A Study of West Bengal," Working Papers id:746, eSocialSciences.
- Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
- Sari, Ramazan & Soytas, Ugur, 2004. "Disaggregate energy consumption, employment and income in Turkey," Energy Economics, Elsevier, vol. 26(3), pages 335-344, May.
- Horn, Manfred, 1999. "Energy demand until 2010 in Ukraine," Energy Policy, Elsevier, vol. 27(12), pages 713-726, November.
- Sunil Mani, 2005.
"Keeping pace with globalisation innovation capability in Korea's telecommunications equipment industry,"
Centre for Development Studies, Trivendrum Working Papers
370, Centre for Development Studies, Trivendrum, India.
- Sunil Mani, 2006. "Keeping Pace with Globalisation Innovation Capability in Korea's Telecommunications Equipment Industry," Working Papers id:745, eSocialSciences.
- Pesaran, M. H. & Shin, Y., 1997.
"Generalised Impulse Response Analysis in Linear Multivariate Models,"
Cambridge Working Papers in Economics
9710, Faculty of Economics, University of Cambridge.
- Pesaran, H. Hashem & Shin, Yongcheol, 1998. "Generalized impulse response analysis in linear multivariate models," Economics Letters, Elsevier, vol. 58(1), pages 17-29, January.
- Yang, Hao-Yen, 2000. "A note on the causal relationship between energy and GDP in Taiwan," Energy Economics, Elsevier, vol. 22(3), pages 309-317, June.
- Masih, Abul M. M. & Masih, Rumi, 1997. "On the temporal causal relationship between energy consumption, real income, and prices: Some new evidence from Asian-energy dependent NICs Based on a multivariate cointegration/vector error-correctio," Journal of Policy Modeling, Elsevier, vol. 19(4), pages 417-440, August.
- Hondroyiannis, George & Lolos, Sarantis & Papapetrou, Evangelia, 2002. "Energy consumption and economic growth: assessing the evidence from Greece," Energy Economics, Elsevier, vol. 24(4), pages 319-336, July.
- Koop, Gary & Pesaran, M. Hashem & Potter, Simon M., 1996. "Impulse response analysis in nonlinear multivariate models," Journal of Econometrics, Elsevier, vol. 74(1), pages 119-147, September.
- Kaufmann, Robert K., 1992. "A biophysical analysis of the energy/real GDP ratio: implications for substitution and technical change," Ecological Economics, Elsevier, vol. 6(1), pages 35-56, July.
- Mozumder, Pallab & Marathe, Achla, 2007. "Causality relationship between electricity consumption and GDP in Bangladesh," Energy Policy, Elsevier, vol. 35(1), pages 395-402, January.
- Yu, Eden S. H. & Hwang, Been-Kwei, 1984. "The relationship between energy and GNP : Further results," Energy Economics, Elsevier, vol. 6(3), pages 186-190, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamprasad M. Pujar).
If references are entirely missing, you can add them using this form.