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Energy consumption and economic growth nexus in Portugal, Italy, Greece, Spain and Turkey: An ARDL bounds test approach (1965–2009)

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  • Fuinhas, José Alberto
  • Marques, António Cardoso

Abstract

The paper examines the nexus between primary energy consumption and growth in Portugal, Italy, Greece, Spain and Turkey (PIGST), with annual time series data, from 1965 to 2009. PIGST are southern European economies which have experienced several episodes that make them of particular interest to the study of periods of economic expansion and stagnation. An ARDL bounds test approach is a suitable technique to examine energy-growth nexus, within the context of countries with both sporadic shocks (outliers) and permanent shocks (structural breaks). Empirical results suggest bidirectional causality between energy and growth in both the long-run and short-run, supporting the feedback hypothesis. The results reveal themselves to be robust to panel framework. An energy conservation policy will reduce GDP growth, while a saving phenomenon is observed, since one additional unit of product requires less than one unit of energy.

Suggested Citation

  • Fuinhas, José Alberto & Marques, António Cardoso, 2012. "Energy consumption and economic growth nexus in Portugal, Italy, Greece, Spain and Turkey: An ARDL bounds test approach (1965–2009)," Energy Economics, Elsevier, vol. 34(2), pages 511-517.
  • Handle: RePEc:eee:eneeco:v:34:y:2012:i:2:p:511-517
    DOI: 10.1016/j.eneco.2011.10.003
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    References listed on IDEAS

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    Keywords

    ARDL bounds test; Short and long-run elasticities; Energy-growth nexus; PIGST;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • 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
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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