Energy-Growth Nexus in Indonesia: Fresh Evidence from Asymmetric Causality Test

Ikhsan Ikhsan, Kamal Fachrurrozi, Muhammad Nasir, Elfiana Elfiana and Nurjannah Nurjannah
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Ikhsan Ikhsan: Faculty of Economics and Business, Universitas Syiah Kuala, Indonesia,
Kamal Fachrurrozi: Sekolah Tinggi Ilmu Manajemen (STIM) Banda Aceh, Indonesia,
Muhammad Nasir: Politeknik Negeri Lhokseumawe, Indonesia,
Elfiana Elfiana: Faculty of Agriculture, Universitas Almuslim, Indonesia,
Nurjannah Nurjannah: Faculty of Economics, Universitas Samudra, Indonesia.

International Journal of Energy Economics and Policy, 2022, vol. 12, issue 1, 396-400

Abstract: The purpose of this study is to examine the causality between energy consumption and economic growth with an asymmetric causality approach in Indonesia for the period of 1971-2014. Asymmetric causality using the Hatemi-J method (2012). Bootstrap simulation is also implemented because the data is not normally distributed and there is volatility to get a more reliable critical value than using asymptotic values. The first finding is that classical causality with Toda-Yamamoto finds no relationship between energy consumption and economic growth in Indonesia. The second finding shows that asymmetric causality shows no relationship between energy consumption and economic growth on a positive cumulative basis. However, the third finding obtained a bidirectional in negative cumulative. It is known that the impact of a decrease in energy consumption is greater on a decrease in economic growth than vice versa. Based on these findings, energy consumption in Indonesia has reached an optimal point so that additional energy consumption does not have an impact on economic growth. However, efforts to stabilize energy and economic growth are urgently needed.

Keywords: Energy Consumption; Economic Growth; Asymmetric Causality (search for similar items in EconPapers)
JEL-codes: C30 Q43 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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