Structural break, unit root, and the causality between energy consumption and GDP in Turkey

By Galip Altinay, E. Karagöl. 2004

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Abstract This paper tries to investigate a series of unit root and causality tests to detect causality between the GDP and energy consumption in Turkey employing Hsiao's version of Granger causality method for the 1950–2000 period. The conventional unit root tests indicate the series are I(1), whereas the endogenous break unit root tests proposed by Zivot and Andrews [Zivot, E. and Andrews, D.W.K., 1992, Further evidence on the great crash, the oil price shock, and the unit root hypothesis, Journal of Business and Economics Statistics 10, 251–270.] and Perron [Perron, P., 1997, Further evidence on breaking trend functions in macroeconomic variables, Journal of Econometrics 80, 355–385.] reveal that the series are trend stationary with a structural break. Therefore, it is inappropriate to take the first difference of the data to achieve stationarity. The main conclusion of this study is that there is no evidence of causality between energy consumption and GDP in Turkey based on the detrended data.

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

View Paper: https://www.semanticscholar.org/paper/e4533b3bf7290ec33b1e8ee0b7b11b65ba6ebf68

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Citations in the corpus

Energy consumption, carbon emissions and economic growth nexus in Bangladesh: Cointegration and dynamic causality analysis (2012, background): “Altinay and Karagol (2004); Jobert and Karanfil (2007); Halicioglu (2009) for instance did find evidence for this theory of no causal relationship between energy consumption and economic growth for Turkey.”
Energy consumption and economic growth revisited: Does the size of unrecorded economy matter? (2008, methodology): “However, using the endogenous break unit root tests proposed by Zivot and Andrews (1992) and Perron (1997), Altinay and Karagol (2004) argued that a spurious causality would exist between the series if the data are mistreated as integrated of order one.”
The causal relationship between energy consumption and economic growth in Lebanon (2012, background): “The main trend tends to be a bivariate analysis; the two variables being energy consumption and GDP (see inter alia, Altinay and Karagol, 2004; Ghosh, 2002; Soytas and Sari, 2003; Yoo, 2005).”
Does more energy consumption support economic growth in net energy-importing countries? (2017, result): “There are a considerable number of studies whose results favor the neutrality hypothesis (Akarca and Long, 1980; Yu and Hwang, 1984; Cheng, 1995; Hondroyiannis et al., 2002; Altinay and Karagol, 2004; Ozturk et al., 2010).”
STRUCTURAL BREAKS, ENERGY CONSUMPTION, AND ECONOMIC GROWTH REVISITED: EVIDENCE FROM TAIWAN (2005, background): “Finally, the finding of no causality in either direction, the so-called dneutrality hypothesisT (Yu and Choi, 1985; Altinay and Karagol, 2004), means that energy conservation policies do not affect GDP.1 1 Recently, the new panel approach has already been applied in the study of this subject.”