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Dynamic Relationship Between Energy and Economic Growth: Evidence from D8 Countries

Author

Listed:
  • Sarwat Razzaqi

    (Fatima Jinnah Women University, Rawalpindi)

  • Faiz Bilquees

    (Fatima Jinnah Women University, Rawalpindi)

  • Saadia Sherbaz

    (Fatima Jinnah Women University, Rawalpindi)

Abstract

Energy sector has a vital influence on an economy, on both demand and supply sides. Therefore, energy production and consumption bear great importance for the developing world. The oil embargo of 1970‘s and its impact on major macroeconomic variables throughout the world attracted many economists to examine the relationship between energy and economic prosperity. The researchers have been unable to establish a definitive direction of causality between the two variables. The purpose of this study is to empirically investigate the dynamic relationship between energy use and economic growth in the D8 countries. The evidence gathered through application of VAR Granger Causality, Johansen Cointegration and VECM proves existence of short-run and long-run correlation between energy use and economic development in all countries. The results supported either uni-directional or bi-directional causality in the D8 countries except for Indonesia in short-run where non-causality was established between the two variables.

Suggested Citation

  • Sarwat Razzaqi & Faiz Bilquees & Saadia Sherbaz, 2011. "Dynamic Relationship Between Energy and Economic Growth: Evidence from D8 Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 50(4), pages 437-458.
  • Handle: RePEc:pid:journl:v:50:y:2011:i:4:p:437-458
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    File URL: http://www.pide.org.pk/pdf/PDR/2011/Volume4/437-458.pdf
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    Cited by:

    1. Rabab Mudakkar, Syeda & Zaman, Khalid & Shakir, Huma & Arif, Mariam & Naseem, Imran & Naz, Lubna, 2013. "Determinants of energy consumption function in SAARC countries: Balancing the odds," Renewable and Sustainable Energy Reviews, Elsevier, vol. 28(C), pages 566-574.
    2. Khan, Muhammad Azhar & Khan, Muhammad Zahir & Zaman, Khalid & Arif, Mariam, 2014. "Global estimates of energy-growth nexus: Application of seemingly unrelated regressions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 63-71.
    3. repec:rss:jnljee:v3i1p4 is not listed on IDEAS

    More about this item

    Keywords

    Energy Use; Economic Growth; D8; VAR Granger Causality; Cointegration; VECM;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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