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Natural Gas Consumption and Economic Growth Nexus: The Role of Exports, Capital and Labor in France

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  • Shahbaz, Muhammad
  • Farhani, Sahbi
  • Rahman, Mohammad Mafizur

Abstract

The present study investigates the relationship between natural gas consumption and economic growth using Cobb-Douglas production function by incorporating exports, capital and labor as additional factors of production. We applied the ARDL bounds testing approach to test the existence of long run relationship between the series. The VECM Granger approach is implemented to detect the direction of causal relation between the variables. Our results show that variables are cointegrated for long run relationship. The results indicate that natural gas consumption, exports, capital and labor are contributing factors to domestic production and hence economic growth in case of France. The causality analysis indicates that feedback hypothesis is validated between gas consumption and economic growth which implies that adoption of energy conservation policies should be discouraged. The bidirectional causality is also found between exports and economic growth, gas consumption and exports, capital and energy consumption, exports and capital. This study opens up new direction for policy makers to formulate a comprehensive energy policy to sustain economic growth for long span of time in case of France.

Suggested Citation

  • Shahbaz, Muhammad & Farhani, Sahbi & Rahman, Mohammad Mafizur, 2013. "Natural Gas Consumption and Economic Growth Nexus: The Role of Exports, Capital and Labor in France," MPRA Paper 50619, University Library of Munich, Germany, revised 12 Oct 2013.
    • Handle: RePEc:pra:mprapa:50619
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    2. Shahbaz, Muhammad & Alam, Md. Mahmudul & Uddin, Gazi Salah & Nanthakumar, Loganathan, 2019. "The Effect of Scale, Technique, Composition and Trade Openness on Energy Demand: Fresh Evidence from Malaysia," SocArXiv xy2z6, Center for Open Science.
    3. Dogan, Eyup, 2015. "The relationship between economic growth and electricity consumption from renewable and non-renewable sources: A study of Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 534-546.
    4. Mehdi Abid & Rafaa Mraihi, 2015. "Disaggregate Energy Consumption Versus Economic Growth in Tunisia: Cointegration and Structural Break Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(4), pages 1104-1122, December.
    5. Muhammad Shahbaz & Mehmet Balcilar & Mantu Kumar Mahalik & Seyi Saint Akadiri, 2023. "Is causality between globalization and energy consumption bidirectional or unidirectional in top and bottom globalized economies?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1939-1964, April.
    6. Victoria Oluwatoyin Foye & Oluwasegun Olawale Benjamin, 2021. "Natural gas consumption and economic performance in selected sub‐Saharan African countries: A heterogeneous panel ARDL analysis," African Development Review, African Development Bank, vol. 33(3), pages 518-532, September.
    7. Eyup Dogan, 2016. "The Relationship between Economic Growth, Energy Consumption and Trade," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 4(1), pages 70-80, March.

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    Keywords

    Exports; Gas Consumption; Growth; France;
    All these keywords.

    JEL classification:

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

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