Causality between Economic Growth and Energy Consumption in Croatia

Zbornik radova Ekonomskog fakulteta u Rijeci, časopis za ekonomsku teoriju i praksu - Proceedings of Rijeka Faculty of Economics, Journal of Economics and Business, Vol. 27, No. 2, 2009, pp. 327-348

22 Pages Posted: 22 May 2013

See all articles by Tomislav Gelo

Tomislav Gelo

University of Zagreb - Faculty of Economics & Business

Date Written: December 24, 2009

Abstract

The main goal of the paper is to investigate relation between economic development and energy consumption in Croatia. This paper examines the casual relationship, using Granger test, between gross domestic products (GDP) and total primary energy consumption in Croatia. Analyzed period is from 1953 to 2005. In the paper vector auto-regression model (VAR), Granger causality test and unit root test are used as tools for analysis. Economic and energetic time series usually have the problem of non-stationarity series. Non-stationary time series are trying stationarity with differentiation of variables, using co-integration technique. Applying Granger’s causality test in Croatian case, we found that GDP Granger causes total energy consumption not energy consumption Granger causes GDP. The result shows that relationship for Croatia runs from total primary energy consumptions to gross domestic products, not from gross domestic products to primary energy consumption. Conclusion of VAR model is that variable total primary energy consumptions and the constant are not significant in the model and that variable gross domestic products is significant. Base conclusion of the paper is that VAR model evaluation shows that change of GDP of 1% in period t-1 would affect the annual total primary energy consumption for 0,509% in period t.

Keywords: GDP, growth, energy, consumption, Granger causality

JEL Classification: C32

Suggested Citation

Gelo, Tomislav, Causality between Economic Growth and Energy Consumption in Croatia (December 24, 2009). Zbornik radova Ekonomskog fakulteta u Rijeci, časopis za ekonomsku teoriju i praksu - Proceedings of Rijeka Faculty of Economics, Journal of Economics and Business, Vol. 27, No. 2, 2009, pp. 327-348, Available at SSRN: https://ssrn.com/abstract=2267782

Tomislav Gelo (Contact Author)

University of Zagreb - Faculty of Economics & Business ( email )

Trg J. F. Kennedyja 6
Zagreb, City of Zagreb 10000
Croatia

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