Energy Consumption and Economic Growth - New Insights into the Cointegration Relationship

This paper examines the long-run relationship between energy consumption and real GDP, including energy prices, for 25 OECD countries from 1981 to 2007. The distinction between common factors and idiosyncratic components using principal component analysis allows to distinguish between developments on an international and a national level as drivers of the long-run relationship. Indeed, cointegration between the common components of the underlying variables indicates that international developments dominate the long-run relationship between energy consumption and real GDP. Furthermore, the results suggest that energy consumption is price-inelastic. Causality tests indicate the presence of a bi-directional causal relationship between energy consumption and economic growth.Dieses Papier untersucht unter Einbeziehung von Energiepreisen die langfristige Beziehung zwischen Energieverbrauch und realen BIP für 25 OECD Länder von 1981 bis 2007. Durch die Unterscheidung von gemeinsamen und idiosynkratischen Komponenten mit Hilfe einer Faktoranalyse kann zwischen Entwicklungen auf internationaler und nationaler Ebene als Treiber der Langfristbeziehung differenziert werden. In der Tat deutet Kointegration zwischen den gemeinsamen Faktoren der zugrundeliegenden Variablen darauf hin, dass internationale Entwicklungen die langfristige Beziehung zwischen Energieverbrauch und realem BIP dominieren. Des Weiteren suggerieren die ökonometrischen Ergebnisse, dass der Energieverbrauch relativ preisunelastisch ist. Kausalitätstests ergeben eine bidirektionale kausale Beziehung zwischen Energieverbrauch und Wirtschaftswachstum

Does electricity consumption impacting financial development? Wavelet analysis

The current study analyzes the time-frequency dependencies between financial development (FD) and electrical power consumption (EPC) in the Gulf Cooperation Council (GCC) Countries (Qatar, Saudi Arabia, Kuwait, the United Arab Emirates, Oman, and Bahrain) during the period 1980-2017. The practical examination is based on the wavelet squared coherence that allows assessing the co-movement between the selected variables of FD and EPC. The main objective of this study is to investigate the short- and long-term dependencies between FD for the GCC countries and EPC to provide helpful insights to policy makers, investors, and government to show them if FD is influenced by EPC in GCC countries. Most of previous related studies have employed co-integration, causality, and panel data techniques. However, this study will be the first study that uses the wavelet coherence analysis to examine the relationship between EPC and FD. The results show periodic changes in the model of the co-movements especially after 2008 for all countries at comparatively high frequencies. Besides, the results indicate strength of co-movement varies by country. Such as a high degree of co-movement between the electrical power consumption and financial development in United Arab Emirates, Kingdom of Saudi Arabia, and Qatar, while low co-movement with Kuwait and Bahrain. The result as well document a comprehensive change in electrical power consumption and financial development co-movement after 2008 at comparatively low frequencies especially in Kuwait, Oman, and Bahrain. The results of the current study provide prospective importance implications for policy makers in improving energy plans for GCC countries that redound to EPC depression policies whereas conserving financial development