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

Author

Listed:
  • Tolga Omay

    (Cankaya University, Department of International Trade Management)

  • Mubariz Hasanov

    (Hacettepe University, Department of Economics)

  • Nuri Uçar

    (Hacettepe University, Department of Economics)

Abstract

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.

Suggested Citation

  • Tolga Omay & Mubariz Hasanov & Nuri Uçar, 2012. "Energy Consumption and Economic Growth: Evidence from Nonlinear Panel Cointegration and Causality Tests," Hacettepe University Department of Economics Working Papers 20130, Hacettepe University, Department of Economics.
  • Handle: RePEc:hac:hacwop:20130
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    Cited by:

    1. Hafner, Kurt A. & Mayer-Foulkes, David, 2013. "Fertility, economic growth, and human development causal determinants of the developed lifestyle," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 107-120.
    2. Smyth, Russell & Narayan, Paresh Kumar, 2015. "Applied econometrics and implications for energy economics research," Energy Economics, Elsevier, vol. 50(C), pages 351-358.
    3. repec:eee:ecolet:v:157:y:2017:i:c:p:1-4 is not listed on IDEAS
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    6. KARGI, Bilal, 2014. "Electricity Consumption and Economic Growth: A Long-Term Co-integrated Analysis for Turkey," MPRA Paper 55699, University Library of Munich, Germany.
    7. Emirmahmutoglu, Furkan & Omay, Tolga, 2014. "Reexamining the PPP hypothesis: A nonlinear asymmetric heterogeneous panel unit root test," Economic Modelling, Elsevier, vol. 40(C), pages 184-190.
    8. Omay, Tolga & Yuksel, Asli & Yuksel, Aydin, 2015. "An empirical examination of the generalized Fisher effect using cross-sectional correlation robust tests for panel cointegration," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 35(C), pages 18-29.
    9. repec:wsi:serxxx:v:60:y:2015:i:02:n:s0217590815500186 is not listed on IDEAS
    10. Tolga Omay & Mubariz Hasanov & Asli Yuksel & Aydin Yuksel, 2016. "A Note on the Examination of the Fisher Hypothesis by Using Panel Co-Integration Tests with Break," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 13-26, June.
    11. Mutascu, Mihai, 2016. "A bootstrap panel Granger causality analysis of energy consumption and economic growth in the G7 countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 63(C), pages 166-171.
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    More about this item

    Keywords

    Nonlinear panel cointegration; nonlinear Panel Vector Error Correction Model; cross section dependency;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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