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Energy Consumption and Economic Growth: Evidence from Nonlinear Panel Cointegration and Causality Tests

  • Tolga Omay

    (Cankaya University, Department of International Trade Management)

  • Mubariz Hasanov

    (Hacettepe University, Department of Economics)

  • Nuri Uçar

    (Hacettepe University, Department of Economics)

In this paper, we propose a nonlinear cointegration test for heterogeneous panels where the alternative hypothesis is an exponential smooth transition (ESTAR) model. We apply our tests for investigating cointegration relationship between energy consumption and economic growth for the G7 countries covering the period 1977-2007. Moreover, we estimate a nonlinear Panel Vector Error Correction Model in order to analyze the direction of the causality between energy consumption and economic growth. By using nonlinear causality tests we analyze the causality relationships in low economic growth and high economic growth regimes. Furthermore, we deal with the cross section dependency problem in both nonlinear panel cointegration test and nonlinear Panel Vector Error Correction Model.

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File URL: http://www.iktisat.hacettepe.edu.tr/WP/WP-2012-10.pdf
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Paper provided by Hacettepe University, Department of Economics in its series Hacettepe University Department of Economics Working Papers with number 20130.

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Length: 28 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:hac:hacwop:20130
Contact details of provider: Postal:
Hacettepe University, Faculty of Economics and Administrative Sciences, Department of Economics, Ankara, Turkey

Phone: 0090 312 297 8652
Fax: (312) 299 2003
Web page: http://www.iktisat.hacettepe.edu.tr
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