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Exploring the relationship between energy consumption and GDP: Evidence from Croatia

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  • Borozan, Djula

Abstract

The main purpose of this paper is to explore the relationship between total energy consumption and real gross domestic product (GDP) covering the period between 1992 and 2010 in Croatia. The methodology employed in this paper is based on the bivariate vector autoregression (VAR) and Granger causality tests. Moreover, the impulse response function and variance decomposition analysis are employed to trace the dynamic response paths of shocks to the system. The empirical analysis shows that, when it is allowed for any deterministic component in the data, total energy consumption and real GDP are not co-integrated in the period observed. Furthermore, there is a unidirectional causality running from total energy consumption to GDP, and an impulse response to GDP caused by energy consumption, being mainly embodied in the first years. The results indicate that total energy consumption is an important component determining economic growth in Croatia and that energy conservation policy should be formulated and implemented wisely. This paper also tests the causality between real GDP and consumption of the five energy variables by using the bivariate VAR. The main implication of these tests is that individual energy forms matter when it comes to energy policy formulation.

Suggested Citation

  • Borozan, Djula, 2013. "Exploring the relationship between energy consumption and GDP: Evidence from Croatia," Energy Policy, Elsevier, vol. 59(C), pages 373-381.
  • Handle: RePEc:eee:enepol:v:59:y:2013:i:c:p:373-381
    DOI: 10.1016/j.enpol.2013.03.061
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    References listed on IDEAS

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    Cited by:

    1. Matias Piaggio & Emilio Padilla & Carolina Roman, 2015. "The long-run relationshiop between C02 emissions and economic activity in a small open economy: Uruguay 1882-2010," Working Papers wpdea1506, Department of Applied Economics at Universitat Autonoma of Barcelona.
    2. repec:eee:rensus:v:76:y:2017:i:c:p:485-492 is not listed on IDEAS
    3. Cosimo Magazzino, 2015. "Energy consumption and GDP in Italy: cointegration and causality analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 17(1), pages 137-153, February.
    4. Borozan, Djula, 2017. "Testing for convergence in electricity consumption across Croatian regions at the consumer's sectoral level," Energy Policy, Elsevier, vol. 102(C), pages 145-153.
    5. Xiaoli He & Hongwu Wang & Haoran Pan, 2014. "Energy Consumption, Economic Development and Temperature in China: Evidence from PSTR Model," Frontiers of Economics in China, Higher Education Press, vol. 9(4), pages 695-712, December.
    6. Mehdi Abid & Rafaa Mraihi, 2015. "Disaggregate Energy Consumption Versus Economic Growth in Tunisia: Cointegration and Structural Break Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(4), pages 1104-1122, December.
    7. repec:eee:jpolmo:v:40:y:2018:i:1:p:166-181 is not listed on IDEAS
    8. Bastola, Umesh & Sapkota, Pratikshya, 2015. "Relationships among energy consumption, pollution emission, and economic growth in Nepal," Energy, Elsevier, vol. 80(C), pages 254-262.
    9. repec:eco:journ2:2017-03-25 is not listed on IDEAS
    10. Nela Vlahinic & Pavle Jakovac, 2014. "Revisiting the Energy Consumption-Growth Nexus for Croatia: New Evidence from a Multivariate Framework Analysis," Contemporary Economics, University of Finance and Management in Warsaw, vol. 8(4), December.
    11. Shahbaz, Muhammad, 2017. "Current Issues in Time-Series Analysis for the Energy-Growth Nexus; Asymmetries and Nonlinearities Case Study: Pakistan," MPRA Paper 82221, University Library of Munich, Germany, revised 19 Oct 2017.
    12. repec:eee:eneeco:v:65:y:2017:i:c:p:271-282 is not listed on IDEAS
    13. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2014. "Spatial dynamics of electricity usage in India," Policy Research Working Paper Series 7055, The World Bank.
    14. repec:eee:rensus:v:76:y:2017:i:c:p:353-368 is not listed on IDEAS

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    Keywords

    Energy consumption; Causality; Croatia;

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