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The dynamics between energy consumption patterns, financial sector development and economic growth in Financial Action Task Force (FATF) countries

Rudra P. Pradhan, Mak Arvin (), Mahendhiran Nair, Sara E. Bennett and John H. Hall

Energy, 2018, vol. 159, issue C, 42-53

Abstract: The energy and financial sectors have undergone rapid transformations over the last five decades and these changes have had a major impact on economic growth rates across the globe. In this paper, using a panel vector error-correction model, we study the interactions between energy consumption patterns, financial sector development, and economic growth in 35 Financial Action Task Force (FATF) countries over 1961–2015. We focus on the direction of Granger causality between the variables. Our empirical results show that both energy consumption patterns and financial sector development are significant long-term drivers of economic growth in the FATF countries. Thus, the sophistication of the financial sector and resources to develop the energy sector will contribute to enhancing the economic prosperity of the FATF countries in the long run.

Keywords: Energy consumption; Financial sector development; Economic growth; Granger causality; FATF countries (search for similar items in EconPapers)
JEL-codes: O43 O16 E44 E31 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:energy:v:159:y:2018:i:c:p:42-53