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Energy Consumption and Economic Growth: New Insights into the Cointegration Relationship

Discussion Papers 1017, 16 S.

Ansgar Belke, Christian Dreger, Frauke de Haan

2010

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Published in: Energy Economics 33(2011), 5, 782-789

Abstract

This paper examines the long-run relationship between energy consumption and real GDP, including energy prices, for 25 OECD countries from 1981 to 2007. The distinction between common factors and idiosyncratic components using principal component analysis allows to distinguish between developments on an international and a national level as drivers of the long-run relationship. Indeed, cointegration between the common components of the underlying variables indicates that international developments dominate the long-run relationship between energy consumption and real GDP. Furthermore, the results suggest that energy consumption is price-inelastic. Causality tests indicate the presence of a bi-directional causal relationship between energy consumption and economic growth.



JEL-Classification: C33;O13;Q43
Keywords: Energy consumption, panel unit roots, panel cointegration, vector error-correction models, Granger causality
Frei zugängliche Version: (econstor)
http://hdl.handle.net/10419/36712

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