Energy consumption and economic growth in the next 11 countries: The bootstrapped autoregressive metric causality approach

Abstract

Departing from previous literature, using bootstrapped autoregressive metric causality approach which is more robust against non-stationarity and break problems than lag augmented tests, this study analyzes causal relation between economic growth and energy consumption in the Next 11 countries. Estimating a trivariate model consisting of GDP per capita, energy consumption per capita and gross capital formation, it was found that the neutrality hypothesis is valid for all of the countries except for Turkey. These findings imply that energy conservation-oriented policies should be implemented in Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Pakistan and Philippines. In the case of Turkey, a unidirectional causal nexus was found from energy consumption to economic growth. Since the growth hypothesis is valid, energy conservation policy poses an obstacle for economic growth in Turkey.