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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)

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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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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Related research

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

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References

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  1. Asafu-Adjaye, John, 1999. "The relationship between energy consumption, energy prices and economic growth: Time series evidence from Asian developing countries," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 123754, Australian Agricultural and Resource Economics Society.
  2. 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.
  3. 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.
  4. Kaddour Hadri, 2000. "Testing for stationarity in heterogeneous panel data," Econometrics Journal, Royal Economic Society, vol. 3(2), pages 148-161.
  5. Ciarreta Antuñano, Aitor & Zárraga Alonso, Ainhoa, 2008. "Economic Growth and Electricity Consumption in 12 European Countries: A Causality Analysis Using Panel Data," BILTOKI 2008-04, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
  6. 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.
  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. 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.
  9. 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.
  10. Lee, Chien-Chiang, 2005. "Energy consumption and GDP in developing countries: A cointegrated panel analysis," Energy Economics, Elsevier, vol. 27(3), pages 415-427, May.
  11. Wolde-Rufael, Yemane, 2005. "Energy demand and economic growth: The African experience," Journal of Policy Modeling, Elsevier, vol. 27(8), pages 891-903, November.
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Cited by:
  1. Kahsai, Mulugeta S. & Nondo, Chali & Schaeffer, Peter V. & Gebremedhin, Tesfa G., 2012. "Income level and the energy consumption–GDP nexus: Evidence from Sub-Saharan Africa," Energy Economics, Elsevier, vol. 34(3), pages 739-746.

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