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Energy consumption and economic growth: evidence from nonlinear panel cointegration and causality tests

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  • Omay, Tolga
  • Hasanov, Mubariz
  • Ucar, Nuri

Abstract

In this paper, we propose a nonlinear cointegration test for heterogeneous panels where the alternative hypothesis is an exponential smooth transition (ESTAR) model. We apply our tests for investigating cointegration relationship between energy consumption and economic growth for the G7 countries covering the period 1977-2007. Moreover, we estimate a nonlinear Panel Vector Error Correction Model in order to analyze the direction of the causality between energy consumption and economic growth. By using nonlinear causality tests we analyze the causality relationships in low economic growth and high economic growth regimes. Furthermore, we deal with the cross section dependency problem in both nonlinear panel cointegration test and nonlinear Panel Vector Error Correction Model.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 37653.

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Date of creation: 26 Mar 2012
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Handle: RePEc:pra:mprapa:37653

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Keywords: Nonlinear panel cointegration; nonlinear Panel Vector Error Correction Model; cross section dependency;

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Cited by:
  1. Hafner, Kurt A. & Mayer-Foulkes, David, 2013. "Fertility, economic growth, and human development causal determinants of the developed lifestyle," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 107-120.
  2. KARGI, Bilal, 2014. "Electricity Consumption and Economic Growth: A Long-Term Co-integrated Analysis for Turkey," MPRA Paper 55699, University Library of Munich, Germany.

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