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Energy Consumption and Economic Growth: A Panel Cointegration Analysis for Developing Countries

Author

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  • Dipa Adhikari

    () (School of Economics, Dalian University of Technology, CHINA)

  • Yanying Chen

    () (School of Economics, Dalian University of Technology, CHINA)

Abstract

The aim of this paper is to examine the long-run relationship between energy consumption and economic growth for 80 developing countries from 1990 to 2009. For this purpose, methods of panel unit root test, panel cointegration test and panel dynamic ordinary least squares (DOLS) are applied. These 80 countries are divided into three income groups, namely, upper middle income countries, lower middle income countries and low income countries. The empirical results reveal a long-run cointegrated relationship between energy consumption and economic growth for the whole panel of countries as well as for each group of countries. We find the strong relation running from energy consumption to economic growth for upper middle income countries and lower middle income countries, and a strong relation which runs from economic growth to energy consumption for low income countries. These findings clearly indicate that energy consumption had a positive and statistically significant impact on economic growth in the long-run for these countries.

Suggested Citation

  • Dipa Adhikari & Yanying Chen, 2013. "Energy Consumption and Economic Growth: A Panel Cointegration Analysis for Developing Countries," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 68-80, May.
  • Handle: RePEc:bap:journl:130206
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    References listed on IDEAS

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    Cited by:

    1. Mudakkar, Syeda Rabab & Zaman, Khalid & Khan, Muhammad Mushtaq & Ahmad, Mehboob, 2013. "Energy for economic growth, industrialization, environment and natural resources: Living with just enough," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 580-595.
    2. repec:gam:jecomi:v:5:y:2017:i:4:p:40-:d:116901 is not listed on IDEAS
    3. Balitskiy, Sergey & Bilan, Yuriy & Strielkowski, Wadim & Štreimikienė, Dalia, 2016. "Energy efficiency and natural gas consumption in the context of economic development in the European Union," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 156-168.
    4. Waseem Ahmad & Tanvir Ahmed, 2014. "Energy Sources and Gross Domestic Product: International Evidence," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 53(4), pages 477-490.
    5. Wolde-Rufael, Yemane, 2014. "Electricity consumption and economic growth in transition countries: A revisit using bootstrap panel Granger causality analysis," Energy Economics, Elsevier, pages 325-330.
    6. A. Öznur Ümit & Elif Bulut, 2015. "Relationship between Energy Consumption and Real Gross Domestic Production in Turkey: A Co-integration Analysis with Structural Breaks," International Journal of Energy Economics and Policy, Econjournals, pages 968-978.

    More about this item

    Keywords

    Energy consumption; Economic growth; Panel cointegration; Developing countries;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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