Asymmetric Cointegration and Causality between Natural Gas Consumption and Economic Growth in Nigeria

Danladi Galadima, Mukhtar and Wambai Aminu, Abubakar (2017): Asymmetric Cointegration and Causality between Natural Gas Consumption and Economic Growth in Nigeria. Published in: Economics and Policy of Energy and the Environment No. 3 (2017): pp. 59-71.

Abstract

This paper investigates asymmetric cointegration, asymmetric adjustment, and causality between natural gas consumption and economic growth in Nigeria using the momentum threshold autoregressive (M-TAR) model and the Granger-causality test in a momentum threshold error correction model (M-TECM). The results revealed evidence of asymmetric cointegration, asymmetric adjustment which suggests that the negative discrepancies from the equilibrium error adjust more rapidly than the positive discrepancies and that there is bidirectional causality between the two variables. The implication of the results is that a shock that decreases the impact of natural gas consumption on economic growth adjusts more rapidly than a shock that increases it and that a consistent natural gas supply increases growth and similarly a rise in growth leads to rise in natural gas consumption. Therefore, policymakers in Nigeria need to confine more attention to the shocks stemming from the decrease in natural gas consumption and the country should adopt energy exploration policies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Keywords: Asymmetric Cointegration, Asymmetric Adjustment, Causality, Natural Gas Consumption, Economic Growth
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy

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