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Energy–growth nexus revisited: an empirical application on transition countries

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Abstract

This study investigates the energy–growth nexus for transition countries analysing Granger causality between GDP growth per capita and energy use per capita. For this purpose, 17 countries located at Central and Eastern Europe and Caucasian region are chosen and a panel dataset consisting of these countries for the available period of 1990–2011 is studied. In the study, Granger causality is investigated using bootstrapped panel causality approach proposed by Konya (Econ Modell 23(6):978–992, 2006). The approach gives consistent results in case of cross-sectional dependency and heterogeneity of slope coefficients between countries. Causality is examined for two scenarios: one with a trend and one without a trend. The results reveal that, in general, there is no causality running between energy consumption and economic growth, yet there is causality running from energy consumption to economic growth for some countries and sign of the relationship is always negative. Therefore, increases in energy consumption harm economic growth.

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Notes

  1. In our review we preferred to focus on cross-country studies as we investigate a cross-country case. Omri (2014) offers a detailed survey for time series specific studies.

  2. In our knowledge, there are no studies on Commonwealth of Independent States and several Central and Eastern Europe countries.

  3. Pretesting for unit roots or cointegration is not necessary for bootstrap panel causality approach since the country-specific bootstrap critical values are estimated, and thus the variables in the SUR system do not necessarly need to be stationary in levels or to be cointegrated.

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Authors and Affiliations

  1. Department of Econometrics, Faculty of Economics and Administrative Sciences, Dumlupinar University, 43100, Kutahya, Turkey

    Mahmut Zortuk & Semih Karacan

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  1. Mahmut Zortuk
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  2. Semih Karacan
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Correspondence to Semih Karacan.

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Zortuk, M., Karacan, S. Energy–growth nexus revisited: an empirical application on transition countries. Environ Dev Sustain 20, 605–623 (2018). https://doi.org/10.1007/s10668-016-9901-9

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