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Linear and Nonlinear Causality between Energy Consumption and Economic Growth: The Case of Mexico 1965–2014

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  • Mario Gómez

    (Instituto de Investigaciones Económicas y Empresariales (Economic and Business Research Institute), Universidad Michoacana de San Nicolás de Hidalgo, Edificio ININEE, Ciudad University, C.P. 58030, Morelia, Mich., Mexico)

  • Aitor Ciarreta

    (Department of Economic Analysis II, University of the Basque Country (UPV/EHU), Avda. Lehendakari Aguirre, 83, 48015 Bilbao, Spain)

  • Ainhoa Zarraga

    (Department of Applied Economics III (Econometrics and Statistics), University of the Basque Country (UPV/EHU), Avda. Lehendakari Aguirre, 83, 48015 Bilbao, Spain)

Abstract

This paper analyzes the causal link between aggregated and disaggregated levels of energy consumption and economic growth in Mexico between 1965 and 2014, with the presence of structural breaks stemming from the series. To that end, unit root with structural breaks, cointegration, and linear and nonlinear causality tests are employed. The results show that there is a long-run relationship between production, capital, labor, and energy, and linear causal links from total and disaggregated energy consumption to economic growth. A nonlinear causality also exists from energy consumption, the transport sector, capital, and labor to output. These results support the growth hypothesis, which maintains that energy is an important input factor for economic activity and that energy conservation policies impact the economic growth in Mexico.

Suggested Citation

  • Mario Gómez & Aitor Ciarreta & Ainhoa Zarraga, 2018. "Linear and Nonlinear Causality between Energy Consumption and Economic Growth: The Case of Mexico 1965–2014," Energies, MDPI, vol. 11(4), pages 1-15, March.
    • Handle: RePEc:gam:jeners:v:11:y:2018:i:4:p:784-:d:138586
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