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The Relationship between Energy Consumption and Economic Growth in South and Southeast Asian Countries: A Panel Vector Autoregression Approach and Causality Analysis

Anthony Rezitis () and Shaikh Mostak Ahammad
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Shaikh Mostak Ahammad: Department of Business Administration of Food and Agricultural Enterprises, University of Patras, G. Seferi 2, Agrinio 30 100, Greece

International Journal of Energy Economics and Policy, 2015, vol. 5, issue 3, 704-715

Abstract: This study investigates the dynamic relationship between energy consumption and economic growth in nine South and Southeast Asian countries (i.e., Bangladesh, Brunei Darussalam, India, Indonesia, Malaysia, Pakistan, the Philippines, Sri Lanka, and Thailand) using a panel data framework. The period for the study is 1990-2012, and the World Bank Development Indicators dataset is used. This study applies a panel vector autoregression model to provide impulse response functions (IRFs), which enable the impact of shocks to be examined between real gross domestic product, energy use, real gross fixed capital formation, and total labor force. In addition, panel Granger causality tests are employed to examine the direction of causality between energy consumption and economic growth. The IRFs show that the shocks of all the variables require a long period to reach the long-run equilibrium level and the greatest response of each variable is attributed to its own shock. The panel Granger causality results evidence bidirectional causality effects between energy consumption and economic growth, which supports the feedback hypothesis, meaning that these variables have strong interdependency between each other. Therefore, policy regarding energy consumption should be considered carefully

Keywords: Panel Vector Autoregression; Panel Ýmpulse Response Functions; Panel Granger Causality; SAARC; Association of Southeast Asian Nations (search for similar items in EconPapers)
JEL-codes: C01 C33 O53 (search for similar items in EconPapers)
Date: 2015
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