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

Author

Listed:
  • Cifter, Atilla
  • Ozun, Alper

Abstract

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.

Suggested Citation

  • Cifter, Atilla & Ozun, Alper, 2007. "Multi-scale Causality between Energy Consumption and GNP in Emerging Markets: Evidence from Turkey," MPRA Paper 2483, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2483
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    File URL: https://mpra.ub.uni-muenchen.de/2483/1/MPRA_paper_2483.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Muhammad Arshad Khan & Usman Ahmad, 2008. "Energy Demand in Pakistan: A Disaggregate Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(4), pages 437-455.
    2. Benhmad, François, 2013. "Dynamic cyclical comovements between oil prices and US GDP: A wavelet perspective," Energy Policy, Elsevier, vol. 57(C), pages 141-151.
    3. Bamidele P. Abalaba & Matthew Abiodun Dada, 2013. "Energy Consumption and Economic Growth Nexus: New Empirical Evidence from Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 3(4), pages 412-423.
    4. Yu, Lean & Li, Jingjing & Tang, Ling & Wang, Shuai, 2015. "Linear and nonlinear Granger causality investigation between carbon market and crude oil market: A multi-scale approach," Energy Economics, Elsevier, vol. 51(C), pages 300-311.
    5. Haiyun Xu, 2016. "Economic policy uncertainty and housing returns in Germany: Evidence from a bootstrap rolling window," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 34(2), pages 309-332.
    6. Yılmaz Bayar & Hasan Alp Özel, 2014. "Electricity Consumption and Economic Growth in Emerging Economies," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 4(2), pages 1-15, April.
    7. Benhmad, François, 2012. "Modeling nonlinear Granger causality between the oil price and U.S. dollar: A wavelet based approach," Economic Modelling, Elsevier, vol. 29(4), pages 1505-1514.
    8. Mirza, Faisal Mehmood & Kanwal, Afra, 2017. "Energy consumption, carbon emissions and economic growth in Pakistan: Dynamic causality analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 1233-1240.
    9. repec:eee:phsmap:v:481:y:2017:i:c:p:284-313 is not listed on IDEAS
    10. Tonn, Victor Lux & Li, H.C. & McCarthy, Joseph, 2010. "Wavelet domain correlation between the futures prices of natural gas and oil," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(4), pages 408-414, November.
    11. Jammazi, Rania & Aloui, Chaker, 2015. "Environment degradation, economic growth and energy consumption nexus: A wavelet-windowed cross correlation approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 436(C), pages 110-125.

    More about this item

    Keywords

    Economic Growth; Energy Consumption; Employment; Wavelets; Causality;

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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