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.
► Cointegration between common factors of energy consumption, GDP and energy prices. ► International developments dominate relationship between energy consumption and GDP. ► Bi-directional causal relationship between energy consumption and economic growth.
The increasing attention given to global energy issues and the international policies needed to reduce greenhouse gas emissions have given a renewed stimulus to research interest in the linkages ...between the energy sector and economic performance at country level. In this paper, we analyse the causal relationship between economy and energy by adopting a Vector Error Correction Model for non-stationary and cointegrated panel data with a large sample of developed and developing countries and four distinct energy sectors. The results show that alternative country samples hardly affect the causality relations, particularly in a multivariate multi-sector framework.
Display omitted
•Granger causality tests performed for GDP and energy consumption (EC) in US states.•Panel Granger causality is tested for the US and for regions within the US.•Wide variation between ...US states and regions.•Including capital and labor changes direction of Granger causality in 35/50 states.•Energy conservation policy design should accommodate within-country variation.
Does energy consumption lead to economic growth or does economic growth cause energy consumption? Arguments can be made either way and empirical studies have been inconclusive. Most of the existing studies relating Gross Domestic Product (GDP) and Energy Consumption (EC) use countries as the unit of observation which complicates the interpretation and generalization of results because countries differ greatly in their stage of economic development, culture, technology and so forth. This study focuses on states within the U.S.A. which avoids many of these complications. Specifically, the relationship between state energy consumption and state GDP for the country is analyzed. Empirical results using panel cointegration and panel causality tests which allows for heterogeneity and structural breaks are applied to the country as a whole and regions within the country. There are significant regional differences within the U.S. especially for two regions; in the Rocky mountain region energy consumption Granger causes state GDP and in the Southwest it is opposite, GDP Granger causes energy consumption. The full results suggest that federal energy policy needs to be flexible to be most beneficial to the different regions.
•Examines long-run panel causality between electricity consumption and urbanization.•Considers total, industrial, and residential electricity.•Strongest and most consistent finding is electricity ...Granger-causes urbanization.•Urbanization change is slowing.•Countries reach full urbanization at substantially different levels.
The share of a population living in urban areas, or urbanization, is both an important demographic, socio-economic phenomenon and a popular explanatory variable in macro-level models of energy and electricity consumption and their resulting carbon emissions. Indeed, there is a substantial, growing subset of the global modeling literature that seeks to link urbanization with energy and electricity consumption, as well as with carbon emissions. This paper aims to inform both modelers and model consumers about the appropriateness of establishing such a link by examining the nature of long-run causality between electricity consumption and urbanization using heterogeneous panel methods and data from 105 countries spanning 1971–2009. In addition, the analysis of the time series properties of urbanization has implications both for modelers and for understanding the urbanization phenomenon. We consider total, industrial, and residential aggregations of electricity consumption per capita, three income-based panels, and three geography-based panels for non-OECD countries. The panel unit root, cointegration, and causality tests used account for cross-sectional dependence, nonstationarity, and heterogeneity – all of which are present in the data set. We cannot reject pervasively Granger causality in the urbanization to electricity consumption direction. However, the causality finding that is both the strongest and most similar across the various panels is that of long-run Granger causality from electricity consumption to urbanization. In other words, the employment and quality of life opportunities that access to electricity afford likely encourage migration to cities, and thus, cause urbanization. Also, nearly all countries’ urbanization series contained structural breaks, and the most recent post-break annual change rates suggested that nearly all countries’ rates of urbanization change were slowing. Lastly, future modeling work on energy consumption or carbon emissions should consider subnational scales of analysis, and focus on measures of urban density or urban form rather than national urbanization levels.
In a globalized world, the financial sectors and the real sectors are interlinked. Although it is a common phenomenon to a developed economy in its national as well as provincial levels, it has ...hardly been tested for the low-income countries like India. It is further difficult to have such linkage effects at the provinces and district levels. This article aims to examine whether per capita commercial bank credit and per capita net district domestic product for the districts of West Bengal state in India have long-run associations for the period 1993–2014 in a panel data framework. Using the panel cointegration and Vector error correction mechanism (VECM) technique, the study reveals that both the financial and real sector indicators are cointegrated and the short-run errors are corrected significantly to establish that there is bilateral causality between credit and output in both long run and short run.
Maintaining equitable distribution of income is one of the priority agendas to any policy maker in a country or at the global level. It is not an exception to India as well as to its states and ...regions. The existing literature shows that Indian states are diverging in incomes particularly after the major reform programmes initiated in 1991–1992. Many factors contribute to the income divergence of the country. The present study throws light a bit deeper towards the grass root level and examines whether the districts of West Bengal are converging in terms of allocation of commercial bank credits for the period 1980–2014. Applying the neoclassical growth and panel unit root test methodology, the study reveals that the districts are not catching up to a common steady state level of per capita credit but they are conditionally converging to the credit of Calcutta, the top district, and to the average credit per capita of the district. The sigma convergence result shows that the districts are significantly diverging if Calcutta is restored in the group.
Abstract Industrial houses and governments of different countries and groups spend a sizeable amount of their earnings upon research and development activities to create new products and obtain ...patents for them. The short-run motive is to get patents, and the long-run motive is to influence income growth of the countries. The empirical findings so far are skeptical on the effects of research and development (R&D) spending. The present study further investigates the long-run associations and short-run dynamics among R&D spending, number of patents and per capita income growth in the panel of countries and groups for the period 1996–2017. Using VAR model for the panel data, the study observes that R&D spending, number of patents and per capita income growth have no long-run equilibrium relations but in the short-run, income growth and number of patents make a cause to R&D spending. However, there are weak causation from patents and R&D spending to income growth rates. The study thus recommends for controlling unfair competition on spending on R&D head and getting patents since it increases the magnitudes of social cost.
In this paper we investigate the long run relationship between financial depth and economic growth, trying to utilize the data in the most efficient manner via panel unit root tests and panel ...cointegration analysis. In addition, we use threshold cointegration tests, and dynamic panel data estimation for a panel-based vector error correction model. The long run relationship is estimated using fully modified OLS. For 10 developing countries, the empirical results provide clear support for the hypothesis that there is a single equilibrium relation between financial depth, growth and ancillary variables, and that the only cointegrating relation implies unidirectional causality from financial depth to growth.
Industrial houses and governments of different countries and groups spend a sizeable amount of their earnings upon research and development activities to create new products and obtain patents for ...them. The short-run motive is to get patents, and the long-run motive is to influence income growth of the countries. The empirical findings so far are skeptical on the effects of research and development (R&D) spending. The present study further investigates the long-run associations and short-run dynamics among R&D spending, number of patents and per capita income growth in the panel of countries and groups for the period 1996-2017. Using VAR model for the panel data, the study observes that R&D spending, number of patents and per capita income growth have no long-run equilibrium relations but in the short-run, income growth and number of patents make a cause to R&D spending. However, there are weak causation from patents and R&D spending to income growth rates. The study thus recommends for controlling unfair competition on spending on R&D head and getting patents since it increases the magnitudes of social cost.
This paper examines the stationarity of carbon dioxide (CO2) emissions per capita for a set of 36 countries covering the period 1870–2006. We employ recently developed unit root and stationarity ...tests that allow for the mean reverting process to be nonlinear and take into account cross sectional dependence. By grouping countries according to their geographical proximity, the importance of cross sectional dependence in panel unit root and stationarity tests is revealed. Using a recently developed nonlinear panel unit root test, we find strong evidence that the per capita carbon dioxide emissions over the last one hundred and fifty years are stationary. Our nonlinear specification captures the dynamics of the emissions time series data more effectively and we obtain evidence supporting stationarity for all country groups under study.
•The stationarity of the CO2 per capita is examined.•Allow for the mean reverting mechanism to be nonlinear•Linear and nonlinear unit root and stationarity tests are employed.•Non-linearity and cross section dependence are taken into account.
PDF
