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Causality between Trade Openness and Energy Consumption: What Causes What in High, Middle and Low Income countries

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  • Shahbaz, Muhammad
  • Nasreen, Samia
  • Ling, Chong Hui
  • Sbia, Rashid

Abstract

This paper explores the relationship between trade openness and energy consumption using data of 91 high, middle and low income countries. The study covers the period of 1980-2010. We have applied panel cointegration and causality approaches for long run and causal relationship between the variables. Our results confirm the presence of cointegration between the variables. The relationship between trade openness and energy consumption is inverted U-shaped in high income countries but U-shaped in middle and low income countries. The homogenous and non-homogenous causality analysis reveals the bidirectional causality between trade openness and energy consumption.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50382.

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Date of creation: 01 Oct 2013
Date of revision: 04 Oct 2013
Handle: RePEc:pra:mprapa:50382

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Keywords: Trade; Energy; Causality;

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