Energy consumption and aggregate income in Italy: cointegration and causality analysis

Cosimo Magazzino

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this article is to assess the empirical evidence of the nexus between aggregate income and energy consumption for Italy during the period 1970-2009, using a time-series approach. After a brief introduction, a survey of the economic literature on this issue is shown, before discussing the data and intro-ducing some econometric techniques. Stationarity tests reveal that both series are non-stationary, or I(1). Moreover, we found a cointegration relationship between the two variables. The short-run dynamics of the variables show that the flow of causality runs from energy use to GDP, and there is a long-run bi-directional causal relationship (or feedback effect) between the two series. Consequently, we conclude that energy is a limiting factor to GDP growth in Italy.

Keywords: Energy policies; energy consumption; GDP; stationarity; cointegration; causality; Italy (search for similar items in EconPapers)
JEL-codes: B22 C22 N54 Q43 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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