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Revisiting the Causal Relationship between Energy Consumption and Economic Growth in South Africa: Evidence from a Bootstrap Rolling Window Approach

Author

Listed:
  • Janneke Dlamini

    (Department of Economics, University of Pretoria)

  • Mehmet Balcilar

    (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus,via Mersin 10, Turkey)

  • Rangan Gupta

    (Department of Economics, University of Pretoria)

  • Roula Inglesi-Lotz

    (Department of Economics, University of Pretoria)

Abstract

The paper examines the relationship between energy consumption and economic growth for South Africa for the period 1971-2009. Most studies examining this relationship do assume that it remains constant through the years; however the reality might be different since many factors can affect the existence and direction of this causality. This paper looks at a bivariate VAR and takes into consideration any instability in the model using bootstrap rolling Granger non-causality tests. Full-sample Granger causality tests report no causal relationship between the two variables. Moreover, parameter stability tests detect instability in the model which means that the full-sample Granger causality results are not valid. We therefore allow for the possibility of structural breaks by using bootstrap rolling-window Granger causality tests. Although our results are not very strong we do however find a sub-period from 1987-1989 where energy consumption has a causal effect on GDP growth. Except for this brief sub-period, the results show no linkage between economic growth and energy consumption.

Suggested Citation

  • Janneke Dlamini & Mehmet Balcilar & Rangan Gupta & Roula Inglesi-Lotz, 2013. "Revisiting the Causal Relationship between Energy Consumption and Economic Growth in South Africa: Evidence from a Bootstrap Rolling Window Approach," Working Papers 201341, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201341
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    Citations

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    Cited by:

    1. Alexander Bass, 2018. "Does Electricity Supply Matter for Economic Growth in Russia: A Vector Error Correction Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 313-318.
    2. Hlalefang Khobai & Sanderson Abel & Pierre Le Roux, 2016. "Co-integration between Electricity Supply and Economic Growth in South Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 6(3), pages 637-645.

    More about this item

    Keywords

    energy consumption; economic growth; causality; bootstrap rolling-window;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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