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Energy consumption and output: time series evidence from non-OECD developing countries

conference contribution
posted on 2008-12-06, 00:00 authored by Shuddha RafiqShuddha Rafiq
Statistically significant association between energy consumption and economic growth is now well established in the literature. However, it still remains an unsettled issue whether economic growth is the cause or effect of energy consumption. The importance of identifying the direction of causality emanates from its relevance in national policy-making issues regarding energy conservation. Energy conservation issue is more important when energy acts as a contributing factor in economic growth than when it is used as a result of higher economic growth. In this backdrop, it is justified to search causal relationship between energy consumption and national output (GDP) of those countries that are expected to have higher energy consumption in future. Evidence shows that countries classified as non-OECD Asia will have the highest growth in energy consumption (3.7 percent) over the period 2003-2030. This forecasted energy consumption in these countries will have significant policy implication in the area of energy conservation. Hence, the present paper attempts to identify the direction of causality between energy consumption and output in the context of six major energy dependent non-OECD Asian countries. However, since the traditional bivariate approach suffers from omitted variable problems (Stern 1993, Masih and Masih, 1996 and Asafu-Adjaye, 2000), this paper employs a trivariate demand side approach consisting of energy consumption, income and prices. The countries selected for this purpose are Bangladesh, China, India, Malaysia, Pakistan and Thailand. Moreover, according to the Energy Information Administration (EIA) data of 2005, these six countries contribute 81.35% of the energy consumption by all non-OECD Asian countries (aggregate energy consumption of 2005 by all non-OECD Asian countries is 113.60 quadrillion BTU while for these six countries alone the consumption is 92.42 quadrillion BTU).

History

Pagination

1-2

Location

New Orleans, Louisiana

Start date

2008-12-03

End date

2008-12-05

Language

eng

Publication classification

EN.1 Other conference paper

Copyright notice

2008, IAEE

Editor/Contributor(s)

Williams D

Title of proceedings

IAEE 2008 Proceedings of the 28th North American Conference for USA Association of Energy Economics

Event

USA Association of Energy Economics. North American Conference (28th: 2008: New Orleans, Louisiana)

Publisher

IAEE

Place of publication

Cleveland, Oh.

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