Modeling Economic Growth and Energy Consumption in Arab Countries: Cointegration and Causality Analysis


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  • Mohammed Issa Shahateet Princess Sumaya University for Technology

Abstract

This paper examines the relationship between energy consumption and real economic growth in 17 Arab countries: Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates and Yemen. It uses an Auto Regressive Distributed Lag (ARDL) model to determine this econometric relationship using data during 1980-2011. After testing for unit root and cointegration, it identifies Granger causality between energy consumption and real economic growth. The analysis allowed for the verification of the four hypotheses that have been discussed widely in economic literature: Neutrality, Conservation, Growth, and Feedback hypotheses. Empirical findings support neutrality hypothesis in 16 out of 17 Arab countries. These findings, of no causality from economic growth to energy consumption and the other way round, imply that energy conservation will not have a significant impact on economic growth and economic growth will have insignificant effect on changes in energy consumption. They also suggest including other more important variables in the determination of economic growth, such as labor and capital. Keywords: economic growth; energy consumption; ARDL model; Granger causality; Arab countries. JEL Classifications: C33; O4; O13; Q43

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Author Biography

Mohammed Issa Shahateet, Princess Sumaya University for Technology

Dr. Shahateet is an associate professor at Princess Symaya University for Technology in Amman, Jordan, where he has taught since 1992. During 1977-1991 he was the head of the Economics Department at the Royal Scientific Society. He also served as the head of industrial economics division, and an economic researcher at the Royal Scientific Society. He has both his BSc and MSc in statistics from the University of Baghdad, Iraq. His Ph.D. is in econometrics from the University of Leeds in the United Kingdom. He is the author of 28 books and working papers, 12 articles that have appeared in professional journals, and 6 papers presented at international conferences. Dr. Shahateet’s research interests include energy economics, labour market, child labour, poverty, statistical analysis, regional economic cooperation, econometric modelling and large-scale data analysis.

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Published

2014-05-29

How to Cite

Shahateet, M. I. (2014). Modeling Economic Growth and Energy Consumption in Arab Countries: Cointegration and Causality Analysis. International Journal of Energy Economics and Policy, 4(3), 349–359. Retrieved from https://econjournals.com/index.php/ijeep/article/view/818

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