Revisiting the Causal Relationship between Energy Consumption and Economic Growth in South Africa: Evidence from a Bootstrap Rolling Window Approach
Janneke Dlamini (),
Mehmet Balcilar (),
Rangan Gupta () and
Roula Inglesi-Lotz ()
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Janneke Dlamini: Department of Economics, University of Pretoria
No 201341, Working Papers from University of Pretoria, Department of Economics
The paper examines the relationship between energy consumption and economic growth for South Africa for the period 1971-2009. Most studies examining this relationship do assume that it remains constant through the years; however the reality might be different since many factors can affect the existence and direction of this causality. This paper looks at a bivariate VAR and takes into consideration any instability in the model using bootstrap rolling Granger non-causality tests. Full-sample Granger causality tests report no causal relationship between the two variables. Moreover, parameter stability tests detect instability in the model which means that the full-sample Granger causality results are not valid. We therefore allow for the possibility of structural breaks by using bootstrap rolling-window Granger causality tests. Although our results are not very strong we do however find a sub-period from 1987-1989 where energy consumption has a causal effect on GDP growth. Except for this brief sub-period, the results show no linkage between economic growth and energy consumption.
Keywords: energy consumption; economic growth; causality; bootstrap rolling-window (search for similar items in EconPapers)
JEL-codes: C32 Q43 Q48 (search for similar items in EconPapers)
Pages: 18 pages
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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201341
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