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Causality between Trade Openness and Energy Consumption: What Causes What in High, Middle and Low Income countries

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  • Shahbaz, Muhammad
  • Nasreen, Samia
  • Ling, Chong Hui
  • Sbia, Rashid

Abstract

This paper explores the relationship between trade openness and energy consumption using data of 91 high, middle and low income countries. The study covers the period of 1980-2010. We have applied panel cointegration and causality approaches for long run and causal relationship between the variables. Our results confirm the presence of cointegration between the variables. The relationship between trade openness and energy consumption is inverted U-shaped in high income countries but U-shaped in middle and low income countries. The homogenous and non-homogenous causality analysis reveals the bidirectional causality between trade openness and energy consumption.

Suggested Citation

  • Shahbaz, Muhammad & Nasreen, Samia & Ling, Chong Hui & Sbia, Rashid, 2013. "Causality between Trade Openness and Energy Consumption: What Causes What in High, Middle and Low Income countries," MPRA Paper 50382, University Library of Munich, Germany, revised 04 Oct 2013.
  • Handle: RePEc:pra:mprapa:50382
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    More about this item

    Keywords

    Trade; Energy; Causality;
    All these keywords.

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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