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Causal relationship between fossil fuel consumption and economic growth in Japan: a multivariate approach

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  • Hazuki Ishida

    () (Faculty of Symbiotic Systems Science, Fukushima University)

Abstract

Fossil fuels (oil, coal, gas) are low-entropy natural resources which seem to be indispensable for our economic prosperity. This paper investigates the relationship between fossil fuel consumption and economic growth in Japan, using a multivariate model of fossil fuels, non-fossil energy, labor and GDP. Using the Johansen cointegration technique, the empirical results indicate that there is a long-run relationship among the variables. Then using vector error correction model, the study reveals unidirectional causality running from fossil fuels to GDP. It implies that decline in fossil fuel consumption may hamper economic growth. On the other hand, non-fossil energy use does not appear to have positive effects on economic growth.

Suggested Citation

  • Hazuki Ishida, 2011. "Causal relationship between fossil fuel consumption and economic growth in Japan: a multivariate approach," Discussion Papers in Economics and Business 11-13, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  • Handle: RePEc:osk:wpaper:1113
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    References listed on IDEAS

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    More about this item

    Keywords

    Fossil fuels; Economic growth; Cointegration; Granger causality;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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