Causality between Energy Consumption and Output Growth in Indian Cement Industry: An Application of Panel Vector Error Correction Model
The aim of this paper is to examine the existence and direction of the causal relationship between energy consumption and output growth for Indian cement industry for the period 1979-80 to 2004-05. The most recently developed panel unit root, heterogeneous panel cointegration and panel-based error correction models have been applied in a multivariate framework including capital stock, labor, and material other than energy and output. The empirical results confirm a positive long-run cointegrated relationship between output and energy consumption when heterogeneous state effect is taken into account. It is also found that there exists a long run bi-directional relationship between energy consumption and output growth in Indian cement industry for the study period, implying that an increase in energy consumption directly affects growth of this sector and that growth also stimulates further energy consumption. These empirical findings imply that energy consumption and output are jointly determined and affect each other. Also, energy conservation policies should be associated with consistent encouragement and support from the government for adoption of energy efficient technologies in order to avoid negative impacts of theses policies on the growth of this industry.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.isec.ac.in/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pedroni, Peter, 1999.
" Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 61(0), pages 653-70, Special I.
- Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Department of Economics Working Papers 2000-02, Department of Economics, Williams College.
- Asafu-Adjaye, John, 2000.
"The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries,"
Elsevier, vol. 22(6), pages 615-625, December.
- Asafu-Adjaye, John, 1999. "The relationship between energy consumption, energy prices and economic growth: Time series evidence from Asian developing countries," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 123754, Australian Agricultural and Resource Economics Society.
- Mehrara, Mohsen, 2007. "Energy consumption and economic growth: The case of oil exporting countries," Energy Policy, Elsevier, vol. 35(5), pages 2939-2945, May.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995.
"Testing for Unit Roots in Heterogeneous Panels,"
Cambridge Working Papers in Economics
9526, Faculty of Economics, University of Cambridge.
- Yoo, S.-H., 2006. "The causal relationship between electricity consumption and economic growth in the ASEAN countries," Energy Policy, Elsevier, vol. 34(18), pages 3573-3582, December.
- Mukherjee, Kankana, 2008. "Energy use efficiency in the Indian manufacturing sector: An interstate analysis," Energy Policy, Elsevier, vol. 36(2), pages 662-672, February.
- Mishra, Vinod & Smyth, Russell & Sharma, Susan, 2009. "The energy-GDP nexus: Evidence from a panel of Pacific Island countries," Resource and Energy Economics, Elsevier, vol. 31(3), pages 210-220, August.
- Ghosh, Sajal, 2002. "Electricity consumption and economic growth in India," Energy Policy, Elsevier, vol. 30(2), pages 125-129, January.
- Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
- Narayan, Paresh Kumar & Smyth, Russell, 2009. "Multivariate granger causality between electricity consumption, exports and GDP: Evidence from a panel of Middle Eastern countries," Energy Policy, Elsevier, vol. 37(1), pages 229-236, January.
- Lee, Chien-Chiang & Chang, Chun-Ping & Chen, Pei-Fen, 2008. "Energy-income causality in OECD countries revisited: The key role of capital stock," Energy Economics, Elsevier, vol. 30(5), pages 2359-2373, September.
- Yang, Ming, 2006. "Energy efficiency policy impact in India: case study of investment in industrial energy efficiency," Energy Policy, Elsevier, vol. 34(17), pages 3104-3114, November.
- Paul, Shyamal & Bhattacharya, Rabindra N., 2004. "Causality between energy consumption and economic growth in India: a note on conflicting results," Energy Economics, Elsevier, vol. 26(6), pages 977-983, November.
- Benjamin S. Cheng, 1999. "Causality Between Energy Consumption and Economic Growth in India: An Application of Cointegration and Error-Correction Modeling," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 34(1), pages 39-49, January.
When requesting a correction, please mention this item's handle: RePEc:sch:wpaper:238. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (B B Chand)
If references are entirely missing, you can add them using this form.