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The Causal Relationship between Energy Consumption and Economic Growth in South Africa: New Evidence from Asymmetric Causality in Frequency Domain

Omid Ranjbar (), Tsangyao Chang (), Elmarie Nel () and Rangan Gupta ()
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Elmarie Nel: Department of Economics, University of Pretoria

No 201483, Working Papers from University of Pretoria, Department of Economics

Abstract: In this paper, we analyze symmetric and asymmetric causal relationship between energy consumption and economic growth in time and frequency domains, using annual data covering the period of 1965-2012. In general, our results tend to suggest that energy consumption causes growth, especially the negative component of energy consumption. However, when accounting for structural breaks, results are mixed, with some evidence of growth leading energy consumption as well. Overall however, using asymmetric causality in both time and frequency domains, we tend to show that a reduction in energy consumption is likely to reduce growth, however, there is no guarantee that increases in energy consumption will boost economic growth.

Keywords: Energy consumption; Growth; Granger Causality; Symmetry and Asymmetry; Time and Frequency Domains; South Africa (search for similar items in EconPapers)
JEL-codes: C32 Q43 Q48 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2014-12
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