Energy Consumption and Economic Growth in OECD Countries

Elçin Aykac Alp


Energy consumption is analyzed economically in many ways especially in energy economics literature. The influence on the basis of this analysis shows the effects of environmental factors and energy-based economic crisis to the growth of the country. The main reason that is pushing countries to identify effective energy policies, and it is necessary to predict what will be the impact of these policies on economic growth. The aim of this study is to analyze the causal relationship between growth and energy consumption in OECD countries during the period of 1980-2012. In this study, 4 basic hypotheses, the neutrality hypothesis, the growth hypothesis, the conservation hypothesis, the feedback hypothesis will be tested from the obtained International Energy Statistics of 23 OECD countries. The test of causality is made with Granger causality analysis. Also Vector Autoregressive (VAR) models and Johansen co-integration analysis are used by the relevance of the data. From those analyses of 23 OECD countries, 11 neutrality, 4 conservation, and 6 growth hypothesis is found to be valid for the period of 1980-2012.

Keywords: Energy consumption, Economic growth, Energy policy

JEL Classifications: Q43, O13, C32

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