Multi-scale Causality between Energy Consumption and GNP in Emerging Markets: Evidence from Turkey

Cifter, Atilla and Ozun, Alper (2007): Multi-scale Causality between Energy Consumption and GNP in Emerging Markets: Evidence from Turkey.

Abstract

Tests results for causality between energy consumption and economic growth do not have a consensus in the financial economics literature. Empirical evidence varies on the economies examined and methodology employed. This paper proposes a wavelet analysis as a semi- parametric model for detecting multi-scale causality between electricity consumption and growth in emerging economies. Using wavelet analysis we find that in the short run there is feedback relationship between GNP and energy consumption, while in the long run GNP leads to energy consumption. Wavelet correlation between GNP and energy consumption is maximum at 3rd time-scale(5-8 years) and this shows that GNP effects electricity consumption maximally around 5-8 years later in the long-run. We also find that the magnitude of the wavelet correlation changes based on time-scales for GNP and energy consumption and thus indicate that GNP and energy consumption are fundamentally different in the long run.

• Item Type: MPRA Paper
• Institution: Marmara University
• Language: English
• Keywords: Economic Growth; Energy Consumption; Employment; Wavelets; Causality
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models

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