EconPapers    
Economics at your fingertips  
 

Energy Consumption and Economic Growth: Further Evidence from Taiwan

Chung-Wei Kao and Jer-Yuh Wan

International Journal of Economics and Finance, 2017, vol. 9, issue 7, 165-178

Abstract: This paper investigates the nonlinear relationship between energy consumption and GDP in Taiwan. By applying the method of Gonzalo and Pitarakis (2006), we consider the possibility of significant threshold effects within the long-run relationship between the two variables, where the effect is trigged by changes in the phase of the business cycle. The Granger-causality test in a threshold model indicates the relationship between energy consumption and GDP is regime-dependent. A bidirectional relationship between these two variables is observed in the contractionary regime, implying that energy serves as an engine of economic growth and that reductions in energy use will have adverse effects on economic activities. On the other hand, a unidirectional causality running from GDP to energy consumption is detected in the expansionary regime. It indicates energy conservation is feasible in this regime with little or no detrimental effects on economic growth. The policy implications are that energy use and economic growth are jointly reinforcing each other during recessionary periods. However, in periods of high economic growth when energy consumption cannot bring about economic growth, energy conservation policies should be adopted with more aggressive thinking.

Keywords: energy consumption; economic growth; cointegration; asymmetry; threshold (search for similar items in EconPapers)
JEL-codes: R00 Z0 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://ccsenet.org/journal/index.php/ijef/article/view/68030/37524 (application/pdf)
http://ccsenet.org/journal/index.php/ijef/article/view/68030 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijefaa:v:9:y:2017:i:7:p:165-178

Access Statistics for this article

More articles in International Journal of Economics and Finance from Canadian Center of Science and Education Contact information at EDIRC.
Series data maintained by Canadian Center of Science and Education ().

 
Page updated 2017-09-29
Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:7:p:165-178