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The Relationship between Energy Consumption and Economic Growth in South and Southeast Asian Countries: A Panel Vector Autoregression Approach and Causality Analysis

Author

Listed:
  • Anthony N. Rezitis

    (Department of Economics and Management, University of Helsinki, P.O. Box 27, Latokartanokaari 9, FI-00014, Finland,
    Department of Business Administration of Food and Agricultural Enterprises, University of Patras, G. Seferi 2, Agrinio 30 100, Greece)

  • Shaikh Mostak Ahammad

    (Department of Business Administration of Food and Agricultural Enterprises, University of Patras, G. Seferi 2, Agrinio 30 100, Greece
    Department of Accounting, Hajee Mohammad Danesh Science and Technology University, Dinajpur 5200, Bangladesh.)

Abstract

This study investigates the dynamic relationship between energy consumption and economic growth in nine South and Southeast Asian countries (i.e., Bangladesh, Brunei Darussalam, India, Indonesia, Malaysia, Pakistan, the Philippines, Sri Lanka, and Thailand) using a panel data framework. The period for the study is 1990-2012, and the World Bank Development Indicators dataset is used. This study applies a panel vector autoregression model to provide impulse response functions (IRFs), which enable the impact of shocks to be examined between real gross domestic product, energy use, real gross fixed capital formation, and total labor force. In addition, panel Granger causality tests are employed to examine the direction of causality between energy consumption and economic growth. The IRFs show that the shocks of all the variables require a long period to reach the long-run equilibrium level and the greatest response of each variable is attributed to its own shock. The panel Granger causality results evidence bidirectional causality effects between energy consumption and economic growth, which supports the feedback hypothesis, meaning that these variables have strong interdependency between each other. Therefore, policy regarding energy consumption should be considered carefully

Suggested Citation

  • Anthony N. Rezitis & Shaikh Mostak Ahammad, 2015. "The Relationship between Energy Consumption and Economic Growth in South and Southeast Asian Countries: A Panel Vector Autoregression Approach and Causality Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 5(3), pages 704-715.
  • Handle: RePEc:eco:journ2:2015-03-09
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    References listed on IDEAS

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    Cited by:

    1. Dmitry Burakov, 2016. "Elasticity of Energy Intensity on a Regional Scale: An Empirical Study of International Trade Channel," International Journal of Energy Economics and Policy, Econjournals, vol. 6(1), pages 65-75.
    2. Mavikela, Nomahlubi & Khobai, Hlalefang, 2018. "Investigating the Link Between Foreign direct investment, Energy consumption and Economic growth in Argentina," MPRA Paper 83960, University Library of Munich, Germany.
    3. repec:eco:journ2:2017-03-25 is not listed on IDEAS
    4. Fang, Zheng & Chang, Youngho, 2016. "Energy, human capital and economic growth in Asia Pacific countries — Evidence from a panel cointegration and causality analysis," Energy Economics, Elsevier, vol. 56(C), pages 177-184.
    5. repec:gam:jsusta:v:10:y:2018:i:5:p:1515-:d:145597 is not listed on IDEAS
    6. repec:eco:journ2:2018-02-25 is not listed on IDEAS
    7. Katircioğlu, Salih Turan & Taşpinar, Nigar, 2017. "Testing the moderating role of financial development in an environmental Kuznets curve: Empirical evidence from Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P1), pages 572-586.

    More about this item

    Keywords

    Panel Vector Autoregression; Panel Ýmpulse Response Functions; Panel Granger Causality; SAARC; Association of Southeast Asian Nations;

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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