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Energy Consumption and Economic Growth: Evidence from COMESA Countries

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Author Info

  • Chali Nondo

    ()
    (Division of Resource Management, West Virginia University)

  • Mulugeta Kahsai

    ()
    (Department of Technology, Virginia State University)

  • Peter Schaeffer

    ()
    (Division of Resource Management, West Virginia University)

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    Abstract

    This study applies panel data techniques to investigate the long-run relationship between energy consumption and GDP for a panel of 19 African countries (COMESA) based on annual data for the period 1980-2005. In the first step, we examine the degree of integration between GDP and energy consumption and find that the variables are integrated of order one. In the second step, we investigate the long-run relationship between energy consumption and GDP; our results provide strong evidence that GDP and energy consumption move together in the long-run. In the third step, we estimate the long-run relationship and test for causality using panel-based error correction models and find a long-run bidirectional relationship between GDP and energy consumption. Further, our analyses reveal that causation runs from energy consumption to GDP for low income COMESA countries.

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    File URL: http://rri.wvu.edu/wp-content/uploads/2012/11/wp2010-11.pdf
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    Bibliographic Info

    Paper provided by Regional Research Institute, West Virginia University in its series Working Papers with number 201001.

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    Length: 20 pages
    Date of creation: 2010
    Date of revision:
    Handle: RePEc:rri:wpaper:201001

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    Web page: http://rri.wvu.edu/research/working-papers/
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    Related research

    Keywords: energy consumption; GDP; panel causality tests; COMESA;

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    References

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    1. Wolde-Rufael, Yemane, 2005. "Energy demand and economic growth: The African experience," Journal of Policy Modeling, Elsevier, vol. 27(8), pages 891-903, November.
    2. Asafu-Adjaye, John, 2000. "The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries," Energy Economics, Elsevier, vol. 22(6), pages 615-625, December.
    3. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    4. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    5. Nathan Rosenberg, 1998. "The Role of Electricity in Industrial Development," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 7-24.
    6. Kaddour Hadri, 1999. "Testing For Stationarity In Heterogeneous Panel Data," Research Papers 1999_04, University of Liverpool Management School.
    7. Lee, Chien-Chiang & Chang, Chun-Ping & Chen, Pei-Fen, 2008. "Energy-income causality in OECD countries revisited: The key role of capital stock," Energy Economics, Elsevier, vol. 30(5), pages 2359-2373, September.
    8. Masih, Abul M. M. & Masih, Rumi, 1996. "Energy consumption, real income and temporal causality: results from a multi-country study based on cointegration and error-correction modelling techniques," Energy Economics, Elsevier, vol. 18(3), pages 165-183, July.
    9. Odhiambo, Nicholas M., 2009. "Electricity consumption and economic growth in South Africa: A trivariate causality test," Energy Economics, Elsevier, vol. 31(5), pages 635-640, September.
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