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Multi-scale Causality between Energy Consumption and GNP in Emerging Markets: Evidence from Turkey

  • Cifter, Atilla
  • Ozun, Alper

Tests results for causality between energy consumption and economic growth do not have a consensus in the financial economics literature. Empirical evidence varies on the economies examined and methodology employed. This paper proposes a wavelet analysis as a semi- parametric model for detecting multi-scale causality between electricity consumption and growth in emerging economies. Using wavelet analysis we find that in the short run there is feedback relationship between GNP and energy consumption, while in the long run GNP leads to energy consumption. Wavelet correlation between GNP and energy consumption is maximum at 3rd time-scale(5-8 years) and this shows that GNP effects electricity consumption maximally around 5-8 years later in the long-run. We also find that the magnitude of the wavelet correlation changes based on time-scales for GNP and energy consumption and thus indicate that GNP and energy consumption are fundamentally different in the long run.

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File URL: http://mpra.ub.uni-muenchen.de/2483/1/MPRA_paper_2483.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2483.

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Date of creation: 01 Mar 2007
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Handle: RePEc:pra:mprapa:2483
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  1. Mehmet Dalkir, 2004. "A new approach to causality in the frequency domain," Economics Bulletin, AccessEcon, vol. 3(44), pages 1-14.
  2. Sari, Ramazan & Soytas, Ugur, 2004. "Disaggregate energy consumption, employment and income in Turkey," Energy Economics, Elsevier, vol. 26(3), pages 335-344, May.
  3. Asafu-Adjaye, John, 2000. "The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries," Energy Economics, Elsevier, vol. 22(6), pages 615-625, December.
  4. Ogulata, R. Tugrul, 2002. "Sectoral energy consumption in Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 6(5), pages 471-480, October.
  5. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
  6. Masih, Abul M. M. & Masih, Rumi, 1996. "Energy consumption, real income and temporal causality: results from a multi-country study based on cointegration and error-correction modelling techniques," Energy Economics, Elsevier, vol. 18(3), pages 165-183, July.
  7. Soytas, Ugur & Sari, Ramazan, 2003. "Energy consumption and GDP: causality relationship in G-7 countries and emerging markets," Energy Economics, Elsevier, vol. 25(1), pages 33-37, January.
  8. Samouilidis, J. -E. & Mitropoulos, C. S., 1984. "Energy and economic growth in industrializing countries : The case of Greece," Energy Economics, Elsevier, vol. 6(3), pages 191-201, July.
  9. Ghali, Khalifa H. & El-Sakka, M. I. T., 2004. "Energy use and output growth in Canada: a multivariate cointegration analysis," Energy Economics, Elsevier, vol. 26(2), pages 225-238, March.
  10. Marco Gallegati, 2005. "A Wavelet Analysis of MENA Stock Markets," Finance 0512027, EconWPA.
  11. repec:ebl:ecbull:v:3:y:2004:i:44:p:1-14 is not listed on IDEAS
  12. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
  13. Ramsey, James B. & Lampart, Camille, 1998. "Decomposition Of Economic Relationships By Timescale Using Wavelets," Macroeconomic Dynamics, Cambridge University Press, vol. 2(01), pages 49-71, March.
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