Economic Growth and Energy Consumption in OECD Countries; A Causality Analysis

“Economic Growth and Energy Consumption in OECD Countries: A Causality Analysis” by Daria Kostyannikova examines the relationship between economic growth and different measures of energy consumption such as coal, oil, natural gas and total energy consumption in a panel of 21 OECD countries from 1965 to 2011 by using modern timeseries techniques. Toda and Yamamoto procedure is used to determine the direction of causality, and the Bounds test is employed in series integrated of different orders where a Johansen Cointegration test cannot be performed. As a robustness check the same analyses are made but excluding the last seven years of the oil price surge and global financial crisis. Although causality results are not uniform across different countries, the same patterns are found in the US where unidirectional causality runs from economic growth to energy consumption, and no causality is found in UK, Sweden, Denmark and Finland. This paper is a starting point in a further investigation of causal relationship to completely understand it and suggest more specific policies for each country

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