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The Role of Natural Gas Consumption and Trade in Tunisia’s Output

Farhani, Sahbi and Shahbaz, Muhammad and Arouri, Mohammed (2013): The Role of Natural Gas Consumption and Trade in Tunisia’s Output.

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Abstract

This paper examines the impact of natural gas consumption, real gross fixed capital formation and trade on the real GDP in case of Tunisia over the period of 1980-2010. We used Auto-Regressive Distributed Lag (ARDL) bounds testing approach to test the existence of long run relationship between the variables. The Vector Error Correction Method (VECM) Granger approach is applied to test the direction of causal relation between the series. Our findings indicate the existence of long-run relationship among the variables. Natural gas consumption, real gross fixed capital formation and trade add in economic growth. Natural gas consumption, real gross fixed capital formation and real trade Granger cause real GDP. These findings open up new insights for policy makers to formulate a comprehensive energy policy to sustain economic growth for long run.

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