Energy consumption and economic growth revisited: Does the size of unrecorded economy matter?
We analyze the long-run relationship between energy consumption and real gross domestic product (GDP) in Turkey taking into account the size of unrecorded economy. Since in developing countries, mainly due to the unrecorded economic activities, the official GDP is not measured correctly, the investigation of the linkage between energy consumption and official GDP may not give reliable results. In this study, empirical results for the case of Turkey over the period 1970-2005 suggest that there is a long-run equilibrium relationship between the officially calculated GDP and energy consumption. Besides, using the error-correction modeling technique, we find out that unidirectional causality runs from official GDP to energy in both short and long runs. However, when we take into account unrecorded economy, we detect neither cointegration nor causality between energy consumption and true GDP. These empirical findings imply that: first, energy conservation policies can be implemented in order to reduce greenhouse gas emissions without any adverse effect on the recorded economic activities; second the production function in the unrecorded economy is not stable. Furthermore, economic policies to combat unrecorded economy may not serve as a complement to energy conservation policies.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Thomas, Jim, 1999. "Quantifying the Black Economy: 'Measurement without Theory' Yet Again?," Economic Journal, Royal Economic Society, vol. 109(456), pages F381-89, June.
- Philip Cagan, 1958.
"The Demand for Currency Relative to Total Money Supply,"
in: The Demand for Currency Relative to Total Money Supply, pages 1-37
National Bureau of Economic Research, Inc.
- Philip Cagan, 1958. "The Demand for Currency Relative to Total Money Supply," NBER Books, National Bureau of Economic Research, Inc, number caga58-1, Jan-Jun.
- Karanfil, Fatih & Ozkaya, Ata, 2007. "Estimation of real GDP and unrecorded economy in Turkey based on environmental data," Energy Policy, Elsevier, vol. 35(10), pages 4902-4908, October.
- Jobert, Thomas & Karanfil, Fatih, 2007. "Sectoral energy consumption by source and economic growth in Turkey," Energy Policy, Elsevier, vol. 35(11), pages 5447-5456, November.
- Triacca, Umberto, 1998. "Non-causality: The role of the omitted variables," Economics Letters, Elsevier, vol. 60(3), pages 317-320, September.
- Lutkepohl, Helmut, 1982. "Non-causality due to omitted variables," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 367-378, August.
- Engle, Robert & Granger, Clive, 2015.
"Co-integration and error correction: Representation, estimation, and testing,"
Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
- Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
- Perron, P., 1994.
"Further Evidence on Breaking Trend Functions in Macroeconomic Variables,"
Cahiers de recherche
9421, Universite de Montreal, Departement de sciences economiques.
- Perron, Pierre, 1997. "Further evidence on breaking trend functions in macroeconomic variables," Journal of Econometrics, Elsevier, vol. 80(2), pages 355-385, October.
- Perron, P., 1990. "Further Evidence On Breaking Trend Functions In Macroeconomics Variables," Papers 350, Princeton, Department of Economics - Econometric Research Program.
- Perron, P., 1994. "Further Evidence on Breaking Trend Functions in Macroeconomic Variables," Cahiers de recherche 9421, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Frey, Bruno S. & Weck-Hanneman, Hannelore, 1984. "The hidden economy as an 'unobserved' variable," European Economic Review, Elsevier, vol. 26(1-2), pages 33-53.
- Paul, Shyamal & Bhattacharya, Rabindra N., 2004. "Causality between energy consumption and economic growth in India: a note on conflicting results," Energy Economics, Elsevier, vol. 26(6), pages 977-983, November.
- Frey, Bruno S & Pommerehne, Werner W, 1984. "The Hidden Economy: State and Prospects for Measurement," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(1), pages 1-23, March.
- Lee, Chien-Chiang, 2006. "The causality relationship between energy consumption and GDP in G-11 countries revisited," Energy Policy, Elsevier, vol. 34(9), pages 1086-1093, June.
- Chontanawat, Jaruwan & Hunt, Lester C. & Pierse, Richard, 2008. "Does energy consumption cause economic growth?: Evidence from a systematic study of over 100 countries," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 209-220.
- Masih, Abul M. M. & Masih, Rumi, 1996. "Energy consumption, real income and temporal causality: results from a multi-country study based on cointegration and error-correction modelling techniques," Energy Economics, Elsevier, vol. 18(3), pages 165-183, July.
- Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
- Lee, Chien-Chiang & Chang, Chun-Ping, 2007. "Energy consumption and GDP revisited: A panel analysis of developed and developing countries," Energy Economics, Elsevier, vol. 29(6), pages 1206-1223, November.
- Altinay, Galip & Karagol, Erdal, 2004. "Structural break, unit root, and the causality between energy consumption and GDP in Turkey," Energy Economics, Elsevier, vol. 26(6), pages 985-994, November.
- Stern, David I., 2000.
"A multivariate cointegration analysis of the role of energy in the US macroeconomy,"
Elsevier, vol. 22(2), pages 267-283, April.
- David I. Stern, 1998. "A multivariate cointegration analysis of the role of energy in the U.S. macroeconomy," Working Papers in Ecological Economics 9803, Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program.
- Frey, Bruno S & Weck, Hannelore, 1983. "Estimating the Shadow Economy: A 'Naive' Approach," Oxford Economic Papers, Oxford University Press, vol. 35(1), pages 23-44, March.
- Klarita Gërxhani, 2004. "The Informal Sector in Developed and Less Developed Countries: A Literature Survey," Public Choice, Springer, vol. 120(3_4), pages 267-300, 09.
- Lee, Chien-Chiang, 2005. "Energy consumption and GDP in developing countries: A cointegrated panel analysis," Energy Economics, Elsevier, vol. 27(3), pages 415-427, May.
- Feige, Edgar L., 1990.
"Defining and estimating underground and informal economies: The new institutional economics approach,"
Elsevier, vol. 18(7), pages 989-1002, July.
- Edgar L. Feige, 2003. "Defining And Estimating Underground And Informal Economies: The New Institional Economics Approach," Development and Comp Systems 0312003, EconWPA.
- Phillip Cagan, 1958. "The Demand for Currency Relative to the Total Money Supply," Journal of Political Economy, University of Chicago Press, vol. 66, pages 303.
- Ang, James B., 2007. "CO2 emissions, energy consumption, and output in France," Energy Policy, Elsevier, vol. 35(10), pages 4772-4778, October.
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
- Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
- Fatih Savasan, 2003. "Modeling the Underground Economy in Turkey: Randomized Response and MIMIC Models," The Journal of Economics, Missouri Valley Economic Association, vol. 29(1), pages 49-76.
- Fethi Ogunc & Gokhan Yilmaz, 2000. "Estimating The Underground Economy In Turkey," Discussion Papers 0004, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Soytas, Ugur & Sari, Ramazan, 2003. "Energy consumption and GDP: causality relationship in G-7 countries and emerging markets," Energy Economics, Elsevier, vol. 25(1), pages 33-37, January.
- Ang, James B., 2008. "Economic development, pollutant emissions and energy consumption in Malaysia," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 271-278.
- Eric Zivot & Donald W.K. Andrews, 1990.
"Further Evidence on the Great Crash, the Oil Price Shock, and the Unit Root Hypothesis,"
Cowles Foundation Discussion Papers
944, Cowles Foundation for Research in Economics, Yale University.
- Zivot, Eric & Andrews, Donald W K, 1992. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 251-70, July.
- Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- Asafu-Adjaye, John, 1999.
"The relationship between energy consumption, energy prices and economic growth: Time series evidence from Asian developing countries,"
1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand
123754, Australian Agricultural and Resource Economics Society.
- Asafu-Adjaye, John, 2000. "The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries," Energy Economics, Elsevier, vol. 22(6), pages 615-625, December.
- Hondroyiannis, George & Lolos, Sarantis & Papapetrou, Evangelia, 2002. "Energy consumption and economic growth: assessing the evidence from Greece," Energy Economics, Elsevier, vol. 24(4), pages 319-336, July.
- Edgar L. Feige, 2004. "How Big IS the Irregular Economy?," Macroeconomics 0404005, EconWPA.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:36:y:2008:i:8:p:3019-3025. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.