Coal Consumption and Economic Growth: Panel Cointegration and Causality Evidence from OECD and Non-OECD Countries

Taeyoung Jin and Jinsoo Kim
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Taeyoung Jin: Department of Earth Resources and Environmental Engineering, Hanyang University, 222 Wangsimni-ro, Seongdong-gu, Seoul 04763, Korea
Jinsoo Kim: Department of Earth Resources and Environmental Engineering, Hanyang University, 222 Wangsimni-ro, Seongdong-gu, Seoul 04763, Korea

Sustainability, 2018, vol. 10, issue 3, 1-15

Abstract: This paper examines the relationship between coal consumption and economic growth for 30 OECD (Organisation for Economic Co-operation and Development) countries and 32 non-OECD countries for 1990–2013 using a multivariate dependent panel analysis. For the analysis, we conducted the common factor defactorization process, unit root test, cointegration test, long-run cointegrating vector, and Granger causality test. Our results suggest the following: First, there is no long-run relationship between coal consumption and economic growth in OECD countries; however, in non-OECD countries, the relationship does exist. Second, excessive coal usage may hinder economic growth in the long run. Lastly, the growth hypothesis (coal consumption affects economic growth positively) is supported in the short run for non-OECD countries. As coal consumption has a positive effect on economic growth in the short run and a negative effect in the long run, energy conservation policies may have adverse effects only in the short run. Thus, non-OECD countries should gradually switch their energy mix to become less coal-dependent as they consider climate change. Moreover, a transfer of technology and financial resources from developed to developing countries must be encouraged at a global level.

Keywords: coal consumption; economic growth; nexus; panel analysis; dependent panel (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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