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

Shahiduzzaman, Md. and Alam, Khorshed (2014) A reassessment of energy and GDP relationship: the case of Australia. Environment, Development and Sustainability , 16 (2). pp. 323-344. ISSN 1387-585X


This paper investigates the long- and short-run relationships between energy consumption and economic growth in Australia using the bound testing and the ARDL approach. The analytical framework utilized in this paper includes both production and demand side models and a unified model comprising both production and demand side variables. The energy-GDP 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 at both the aggregate and the disaggregate levels of energy consumption.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: © 2013 Springer Science+Business Media Dordrecht. Published online 3 July 2013. Permanent restricted access to published version in accordance with the copyright policy of the publisher. COMMENTS AND SUGGESTIONS
Faculty / Department / School: Current - Faculty of Business, Education, Law and Arts - School of Commerce
Date Deposited: 07 Jul 2013 23:05
Last Modified: 18 Nov 2014 03:28
Uncontrolled Keywords: causality; cointegration; energy consumption; GDP
Fields of Research : 14 Economics > 1402 Applied Economics > 140202 Economic Development and Growth
14 Economics > 1402 Applied Economics > 140205 Environment and Resource Economics
14 Economics > 1403 Econometrics > 140303 Economic Models and Forecasting
Socio-Economic Objective: B Economic Development > 91 Economic Framework > 9199 Other Economic Framework > 919902 Ecological Economics
Identification Number or DOI: 10.1007/s10668-013-9479-4
URI: http://eprints.usq.edu.au/id/eprint/23700

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