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Energy consumption and GDP in Italy: cointegration and causality analysis

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  • Cosimo Magazzino

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Abstract

The aim of this article was to assess the empirical evidence of the nexus between GDP and energy consumption for Italy during the period 1970–2009, using a time series approach. After a brief introduction, a survey of the economic literature on this issue is shown, before discussing the data and introducing some econometric techniques. Stationarity tests reveal that both series are nonstationary, or I(1). Moreover, a cointegration relationship is found between the two variables. The short-run dynamics of the variables show that the flow of causality runs from energy use to GDP, and there is a long-run bidirectional causal relationship (or feedback effect) between the two series. Consequently, we conclude that energy is a limiting factor to GDP growth in Italy and that energy conservation policy should be formulated and implemented wisely. Copyright Springer Science+Business Media Dordrecht 2015

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  • 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.
  • Handle: RePEc:spr:endesu:v:17:y:2015:i:1:p:137-153
    DOI: 10.1007/s10668-014-9543-8
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    More about this item

    Keywords

    Energy policies; Energy consumption; GDP; Stationarity; Cointegration; Causality; Italy; B22; C22; N54; Q43;

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • N54 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Europe: 1913-
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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