Causality and dynamics of energy consumption and output: evidence from non-OECD Asian countries

Salim, Ruhul A. and Rafiq, Shuddhasattwa and Hassan, A.F.M. Kamrul (2008) Causality and dynamics of energy consumption and output: evidence from non-OECD Asian countries. Journal of Economic Development, 33 (2). pp. 1-26. ISSN 0254-8372

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This article examines the short-run and long-run causal relationship between energy consumption and output in six non-OECD Asian developing countries. Standard time series econometrics is used for this purpose. Based on cointegration and vector error correction modeling, the empirical result shows a bi-directional causality between energy consumption and income in Malaysia, while a unidirectional causality from output to energy consumption in China and Thailand and energy consumption to output in India and Pakistan. Bangladesh remains as an energy neutral economy confirming the fact that it is one of the lowest energy consuming countries in Asia. Both the generalized variance decompositions and the impulse response functions confirm the direction of causality in these countries. These findings have important policy implications for concerned countries. Countries like China and Thailand may contribute to the fight against global warming directly implementing energy conservation measures whereas India and Pakistan may focus on technological developments and mitigation policies. For Malaysia, a balanced combination of alternative policies seems to be appropriate.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: This article can be viewed upon request from
Faculty/School / Institute/Centre: Current - USQ Other
Faculty/School / Institute/Centre: Current - USQ Other
Date Deposited: 11 Apr 2010 04:49
Last Modified: 08 Sep 2014 06:13
Uncontrolled Keywords: energy conservation; cointegration; error correction model; generalized variance decompositions; generalized impulse response functions
Fields of Research (2008): 14 Economics > 1402 Applied Economics > 140202 Economic Development and Growth
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150307 Innovation and Technology Management
14 Economics > 1499 Other Economics > 149902 Ecological Economics
Fields of Research (2020): 44 HUMAN SOCIETY > 4404 Development studies > 440499 Development studies not elsewhere classified
35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3599 Other commerce, management, tourism and services > 359999 Other commerce, management, tourism and services not elsewhere classified
38 ECONOMICS > 3899 Other economics > 389902 Ecological economics
Socio-Economic Objectives (2008): B Economic Development > 91 Economic Framework > 9101 Macroeconomics > 910103 Economic Growth
B Economic Development > 85 Energy > 8507 Energy Conservation and Efficiency > 850799 Energy Conservation and Efficiency not elsewhere classified

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