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

24 Pages Posted: 9 Jul 2010 Last revised: 8 Dec 2014

See all articles by Ansgar Hubertus Belke

Ansgar Hubertus Belke

University of Duisburg-Essen - Department of Economics and Business Administration; IZA Institute of Labor Economics; Centre for European Policy Studies

Christian Dreger

European University Viadrina Frankfurt (Oder); IZA Institute of Labor Economics; Chinese Academy of Social Sciences (CASS)

Frauke Dobnik

University of Duisburg-Essen - Department of Economics; Ruhr Graduate School in Economics

Date Written: June 1, 2010

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.

Keywords: Energy consumption, panel unit roots, panel cointegration, vector errorcorrection models, Granger causality

JEL Classification: C33, O13, Q43

Suggested Citation

Belke, Ansgar Hubertus and Dreger, Christian and Dobnik, Frauke, Energy Consumption and Economic Growth - New Insights into the Cointegration Relationship (June 1, 2010). Ruhr Economic Paper No. 190, DIW Berlin Discussion Paper No. 1017, Available at SSRN: https://ssrn.com/abstract=1635765 or http://dx.doi.org/10.2139/ssrn.1635765

Ansgar Hubertus Belke

University of Duisburg-Essen - Department of Economics and Business Administration ( email )

Universitätsstr. 9
Essen, 45141
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for European Policy Studies ( email )

1 Place du Congres, 1000
Brussels, 1000
Belgium

Christian Dreger

European University Viadrina Frankfurt (Oder) ( email )

Frankfurt (Oder)
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Chinese Academy of Social Sciences (CASS) ( email )

Beijing, 100732
China

Frauke Dobnik (Contact Author)

University of Duisburg-Essen - Department of Economics ( email )

Universitätsstr. 12
Essen, 45117
Germany
+49 201 183 4912 (Phone)
+49 201 183 4181 (Fax)

HOME PAGE: http://www.makro.wiwi.uni-due.de/team/frauke-dobnik-rgs-stipendiat/

Ruhr Graduate School in Economics ( email )

Hohenzollernstrasse 1-3
Essen, DE 45128
Germany

HOME PAGE: http://rgs-econ.org/

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