On the cointegration and causality between Oil market, Nuclear Energy Consumption, and Economic Growth: Evidence from Developed Countries

Naser, Hanan (2014): On the cointegration and causality between Oil market, Nuclear Energy Consumption, and Economic Growth: Evidence from Developed Countries.

Abstract

This study uses Johansen cointegration technique to examine both the equilibrium relationship and the causality between oil consumption, nuclear energy consumption, oil price and economic growth. To do so, four industrialized countries including: the US, Canada, Japan, and France are investigated over the period from 1965 - 2010. The cointegration test results suggest that the proposed variables tend to move together in the long-run in all countries. In addition, the causal linkage between the variables is scrutinized through the exogeneity test. The results point that energy consumption (i.e., oil or nuclear) has either a predictive power for economic growth, or feedback impact with real GDP growth in all countries. The oil consumption is found to have a great effect on economy in all the investigated countries, especially in Canada. Also, exogenous test with respect to the speed of adjustment shows that oil consumption has a predictive power for real GDP in the US, Japan, and France. Regarding nuclear energy consumption - growth nexus, results illustrate that nuclear energy consumption has a predictive power for real economic growth in the US, Canada, and France. On the basis of speed of adjustment, it is concluded that there is bi-directional causality between oil consumption and economic growth in Canada. On the other hand, there is bidirectional causal relationship between nuclear energy consumption and real GDP growth in Japan.

• Item Type: MPRA Paper
• Language: English
• Keywords: Energy consumption, Economic growth, Nuclear energy, Oil consumption, Cointegration, Error correction model
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables; 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; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q40 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q41 - Demand and Supply ; Prices; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q42 - Alternative Energy Sources

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