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Kim, Donggeun; Park, Young-Joon
Energy strategy reviews, 11/2022, Letnik: 44Journal Article
Exploring the causal relationship between energy consumption and economic growth is important in energy economics. We performed an empirical re-examination of the causal interactions between these two factors in South Korea. As most previous studies in South Korea overlook the nonlinear behavior of energy consumption and economic growth, we examine the possible nonlinear relationship between them in the time-frequency domain. Moreover, we provide additional features of their nonlinear relationship with volatility spillovers on a timescale. The empirical findings have different implications for short-run GDP fluctuations, medium-run business cycles, and long-run economic growth. A unidirectional nonlinear causal relationship exists from economic growth to energy consumption in the short and medium run. However, in the long run, there is no nonlinear causal relationship between them. •Wavelet decomposition captures the layered characteristics of the timescale-aggregated data.•In the short and medium run, there exist nonlinear causal relations from economic growth to energy consumption.•In the long run, there is no nonlinear causality between energy consumption and economic growth.•Volatility transmissions uncover a source of the nonlinear causal relationship.
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