Exploring the relationship between energy use and economic growth with bivariate models: New evidence from G-7 countries

By T. Zachariadis. 2007

219 citations recorded by the source corpus.

Abstract There is a rapidly growing literature on the interaction between energy use and economic development, with many analysts drawing policy conclusions on the basis of Granger causality tests that involve only an energy and an economic variable. This paper attempts to demonstrate empirically that such studies, although useful for certain applications, may be of limited use for policy purposes. After outlining theoretical and methodological issues associated with such approaches, I apply bivariate energy–economy causality tests for Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, using aggregate and sectoral data and three different modern econometric methods. The results, which are often contradictory or economically implausible, illustrate explicitly that one should be cautious when drawing policy implications with the aid of bivariate causality tests on small samples. I therefore underline the importance of utilizing as large sample sizes as possible and using multivariate models, which are closer to economic theory, accommodate several mechanisms and causality channels and provide a better representation of real-world interactions between energy use and economic growth.

Subfields: Economics and Econometrics, Pollution, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/5df830ccf707c2c459dc7aa6f2bbf765ffef2279

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Citations in the corpus

Energy consumption and economic growth nexus in Portugal, Italy, Greece, Spain and Turkey: An ARDL bounds test approach (1965–2009) (2012, background): “The literature analyzing the energy-growth nexus, controlling for particular sporadic and permanent shocks by country (e.g. Zachariadis, 2007), is still scarce.”
Survey of the international evidence on the causal relationship between energy consumption and growth (2010, background): “These points are reiterated in Zachariadis (2007)”
Energy consumption and economic growth in China: A multivariate causality test (2011, methodology): “…(VECM) technique with a bivariate (Lise and Van Montfort, 2007; Masih and Masih, 1996; Shiu and Lam, 2004; Soytas and Sari, 2003; Yuan et al., 2007; Zachariadis, 2007) or multivariate (Ghali and El-Sakka, 2004; Masih and Masih, 1997; Oh and Lee, 2004a; Soytas and Sari, 2007) methodology are…”
Sectoral Analysis of the Causal Relationship Between Renewable and Non-Renewable Energy Consumption and Real Output in the US (2010, background): “While previous studies by Erol and Yu (1989), Thoma (2004), and Zachariadis (2007), have examined the causal relationship between measures of energy consumption by sector and measures of output in the US, these studies did not differentiate between renewable and non-renewable energy consumption in…”
Energy consumption and economic growth : Evidence from China at both aggregated and disaggregated levels (2008, background): “…in a bivariate model (see Zamani, 2007; Lise and Van Montfort, 2007; Chen et al., 2007; Lee and Chang, 2007; Mehrara, 2007;Narayan, Smyth andPrasad, 2007;Narayanand Singh, 2007; Zachariadis, 2007; amongothers) still don't come to a consensus on the role of energy in economic development.”
A meta-analysis investigation of the direction of the energy-GDP causal relationship: implications for the growth-degrowth dialogue (2014, methodology): “…Soytas et al. (2001), Aqeel and Butt (2001), Soytas and Sari (2003), Narayan and Smyth (2005), Al-Iriani (2006), Lee (2006), Yoo and Kim (2006), Zachariadis (2007), Mozumder and Marathe (2007), Zamani (2007), Mehrara (2007), Lise and Van Montfort (2007), Lee and Chang (2007b), Ang (2008),…”