Energy Consumption and Economic Growth: New Insights into the Cointegration Relationship

Ansgar Belke, Christian Dreger and Frauke de Haan
Authors registered in the RePEc Author Service: Frauke Dobnik

No 1017, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper examines the long-run relationship between energy consumption and real GDP, including energy prices, for 25 OECD countries from 1981 to 2007. The distinction between common factors and idiosyncratic components using principal component analysis allows to distinguish between developments on an international and a national level as drivers of the long-run relationship. Indeed, cointegration between the common components of the underlying variables indicates that international developments dominate the long-run relationship between energy consumption and real GDP. Furthermore, the results suggest that energy consumption is price-inelastic. Causality tests indicate the presence of a bi-directional causal relationship between energy consumption and economic growth.

Keywords: Energy consumption; panel unit roots; panel cointegration; vector error-correction models; Granger causality (search for similar items in EconPapers)
JEL-codes: C33 O13 Q43 (search for similar items in EconPapers)
Pages: 16 p.
Date: 2010
New Economics Papers: this item is included in nep-ene
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Citations: View citations in EconPapers (29)

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Related works:
Journal Article: Energy consumption and economic growth: New insights into the cointegration relationship (2011)
Working Paper: Energy Consumption and Economic Growth – New Insights into the Cointegration Relationship (2010)
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