Energy and economic growth in G20 countries: Panel cointegration analysis

Abstract

Rising economic performance has enlarged energy demand, carbon emissions and global warming. Policy makers need to avoid global warming. Therefore, energy-growth nexus is important. This paper empirically investigates the relationship between energy consumption and economic growth for a panel of G20 countries over the period 1990-2016. For this purpose, the paper considers the panel cointegration and panel vector error correction model. Panel cointegration test set out a long-run equilibrium relationship. Long-run relationship is estimated using a Fully Modified OLS (FMOLS) and Dynamic OLS (DOLS). Panel Granger causality and Vector Error Correction Model results show that bidirectional relationship between energy consumption and GDP. It is indicates that "feedback hypothesis" is valid for G20 countries.