A reassessment of energy and GDP relationship: a case of Australia

Shahiduzzaman, Md and Alam, Khorshed (2012) A reassessment of energy and GDP relationship: a case of Australia. Working Paper. Munich University Library , Germany. [Report]

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This paper investigates the long-run and short-run relationships between energy consumption and economic
growth in Australia using the bound testing and the ARDL approach. For the first time in the literature we employ both production and demand side models and a unified model comprising both production and demand side variables for a single set of data. The relationships are investigated at aggregate as well as several disaggregated energy categories, such as coal, oil, gas and electricity. The possibilities of one or more structural break(s) in the data series are examined by applying the recent advances in techniques. We find that the results of the cointegration tests could be affected by the structural break(s) in the data. It is, therefore, crucial to incorporate the information on structural break(s) in the subsequent modelling and inferences. Moreover, neither the production side nor the demand side framework alone can provide sufficient information to draw an ultimate conclusion on the cointegration and causal direction between energy and output. When alternative frameworks and structural break(s) in time-series are explored properly, strong evidence of a
bidirectional relationship between energy and output can be observed. The finding is true both at aggregate and
disaggregate levels of energy consumption.

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Item Type: Report (Working Paper)
Item Status: Live Archive
Additional Information: This paper has been submitted to a journal
Faculty / Department / School: Historic - Faculty of Business and Law - School of Accounting, Economics and Finance
Date Deposited: 27 Jun 2013 01:19
Last Modified: 11 Dec 2017 05:44
Uncontrolled Keywords: energy consumption; economic growth; cointegration; causality
Fields of Research : 14 Economics > 1402 Applied Economics > 140205 Environment and Resource Economics
14 Economics > 1402 Applied Economics > 140202 Economic Development and Growth
14 Economics > 1403 Econometrics > 140304 Panel Data Analysis
Socio-Economic Objective: B Economic Development > 85 Energy > 8507 Energy Conservation and Efficiency > 850701 Commercial Energy Conservation and Efficiency
D Environment > 96 Environment > 9603 Climate and Climate Change > 960301 Climate Change Adaptation Measures
URI: http://eprints.usq.edu.au/id/eprint/20794

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