Energy consumption and output: Evidence from a panel of 14 oil-exporting countries

Hassan Mohammadi and Shahrokh Parvaresh

Energy Economics, 2014, vol. 41, issue C, 41-46

Abstract: We examine the long-run relation and short-run dynamics between energy consumption and output in a panel of 14 oil-exporting countries over 1980–2007. Panel unit root tests, which account for common cross-sectional factors, fail to reject non-stationarity in both variables. Thus, we explore their long-run relation and short-run dynamics using three alternative panel estimation techniques — dynamic fixed effect, pooled and mean-group estimators before and after accounting for common cross-sectional factors. These estimators allow for various degrees of heterogeneity in long-run parameters and short-run dynamics. The results based on the mean group estimator with common correlated effects suggest (a) a stable relation between energy consumption and output; (b) bi-directional causality in both long- and short-run; and (c) the robustness of the long-run causality results to the inclusion of additional variables. As such, environmental policies designed to curtail energy may have significant long-run ramifications for economic growth, and policies designed to promote economic growth may have adverse environmental consequences.

Keywords: Economic growth; Energy consumption; Cross-sectional dependency; Oil-exporting countries (search for similar items in EconPapers)
JEL-codes: C10 C31 C33 O40 Q40 Q50 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:41:y:2014:i:c:p:41-46

DOI: 10.1016/j.eneco.2013.11.002

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