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Energy Consumption and Economic Growth Revisited: Structural Breaks and Cross-section Dependence

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  • Frauke Dobnik

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Abstract

This paper examines the causal relationship between real GDP and energy consumption for 23 OECD countries from 1971 to 2009. Using recently developed panel econometric techniques the present paper takes into account structural breaks and cross-section dependence when analysing the energy consumption-growth nexus. The empirical results of this study indicate that there exists a long-run equilibrium relationship between real GDP and energy consumption, and the impact of real GDP on energy consumption is larger than vice versa. Furthermore, the empirical evidence of a dynamic panel error-correction model reveals a bidirectional causal relationship between economic growth and energy consumption in both the short and long run.

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Bibliographic Info

Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0303.

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Length: 43 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:rwi:repape:0303

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Keywords: Energy consumption; panel unit roots and cointegration; structural breaks; cross-section dependence; panel error-correction model; Granger causality;

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