A D2C Algorithm on the Natural Gas Consumption and Economic Growth: Challenges Faced by Germany and Japan

Energy, 219, 19586, 2021 DOI: 10.1016/j.energy.2020.119586, ISSN: 0360-5442

Posted: 10 Mar 2021

See all articles by Cosimo Magazzino

Cosimo Magazzino

University of Rome III; Royal Economic Society; Italian Economic Association

Marco Mele

Luspio University - School of Political Sciences

Nicolas Schneider

Centre d'Économie de la Sorbonne (CES) - Center of Economics of the Sorbonne (CES); University of Paris 1 Pantheon-Sorbonne, Centre d'Economie de la Sorbonne (CES), Students

Date Written: 2021

Abstract

While Germany and Japan are going through major energy reforms, natural gas consumption is taking a growing share in their energy supply. This paper adopts a Machine Learning approach to assess the causal link between natural gas consumption and economic growth for both economies. A Causal Direction from Dependency (D2C) algorithm with the interconnection of the sub-class is employed using yearly data from 1970 to 2018. The interconnections of the sub-classes are found for both economies, indicating evidence of causalities operating in both directions. In addition, the propagation over the seven eras is linear and homogeneously continue for Japan, while this effect meets a stabilization phase in the fifth era for Germany. The empirical findings claim strong support for the existence of a bidirectional causality between these variables in Germany and Japan, which is in line with the “feedback hypothesis”. Although the strength of this bidirectional relationship is clear for both economies, its time-propagation is expected to be longer for Japan. Accordingly, this study claims that the gas supply should be further strengthened to progressively replace the most polluting fuels (oil and coal) and ensure a feasible transition towards a renewable path.

Keywords: Natural gas consumption; GDP; Machine learning; D2C algorithm; Germany; Japan

Suggested Citation

Magazzino, Cosimo and Mele, Marco and Schneider, Nicolas, A D2C Algorithm on the Natural Gas Consumption and Economic Growth: Challenges Faced by Germany and Japan (2021). Energy, 219, 19586, 2021 DOI: 10.1016/j.energy.2020.119586, ISSN: 0360-5442, Available at SSRN: https://ssrn.com/abstract=3791994

Cosimo Magazzino (Contact Author)

University of Rome III ( email )

Via Ostiense 139
Rome, RM 00154
Italy

HOME PAGE: http://scienzepolitiche.uniroma3.it/cmagazzino/

Royal Economic Society ( email )

London
United Kingdom

Italian Economic Association ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy

HOME PAGE: http://www.siecon.org/online/en/

Marco Mele

Luspio University - School of Political Sciences ( email )

Rome
Italy

Nicolas Schneider

Centre d'Économie de la Sorbonne (CES) - Center of Economics of the Sorbonne (CES) ( email )

106-112 bd de l'Hôpital
Paris, 75642
France

University of Paris 1 Pantheon-Sorbonne, Centre d'Economie de la Sorbonne (CES), Students ( email )

106-112 Boulevard de l'hopital
Paris Cedex 13
France

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
32
PlumX Metrics