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The Relationship between Energy Consumption and Economic Growth: Evidence from Different Income Country Groups

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  • Nermin Yaþar

    (Departmant of Foreign Trade, Çankaya University, Ankara, Turkey)

Abstract

This study analyses the relationship between energy consumption and economic growth for 119 countries during the period of 1970-2015, classified into four groups regarding to the World Bank income ranking. The main motivation of this study is to analyze whether the causal relationship differs between different income groups of countries. For this purpose, panel auto regressive distributed lag boundary approach and Granger causality test were used. The results of the study indicate that the causal relationship between energy use and economic growth differs depending on which income group country belongs to. We conclude that the feedback hypothesis is supported for upper-middle income group in the long run and high-income group, while conservation hypothesis is supported for upper-middle income group in the short run and lower-middle income group in the long run. Finally, neutrality hypothesis is supported for low and lower middle-income groups in the short run.

Suggested Citation

  • Nermin Yaþar, 2017. "The Relationship between Energy Consumption and Economic Growth: Evidence from Different Income Country Groups," International Journal of Energy Economics and Policy, Econjournals, vol. 7(2), pages 86-97.
  • Handle: RePEc:eco:journ2:2017-02-12
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    More about this item

    Keywords

    Energy Consumption; Economic Growth; Panel Unit Root; Auto Regressive Distributed Lag Boundary Approach; Panel Causality;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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