Journal
ENERGY ECONOMICS
Volume 41, Issue -, Pages 41-46Publisher
ELSEVIER
DOI: 10.1016/j.eneco.2013.11.002
Keywords
Economic growth; Energy consumption; Cross-sectional dependency; Oil-exporting countries
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We examine the long-run relation and short-run dynamics between energy consumption and output in a panel of 14 oil-exporting countries over 1980-2007. Panel unit root tests, which account for common cross-sectional factors, fail to reject non-stationarity in both variables. Thus, we explore their long-run relation and short-run dynamics using three alternative panel estimation techniques dynamic fixed effect, pooled and mean-group estimators before and after accounting for common cross-sectional factors. These estimators allow for various degrees of heterogeneity in long-run parameters and short-run dynamics. The results based on the mean group estimator with common correlated effects suggest (a) a stable relation between energy consumption and output; (b) bi-directional causality in both long- and short-run; and (c) the robustness of the long-run causality results to the inclusion of additional variables. As such, environmental policies designed to curtail energy may have significant long-run ramifications for economic growth, and policies designed to promote economic growth may have adverse environmental consequences. (C) 2013 Elsevier B.V. All rights reserved.
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