Energy Consumption and GDP in Italy: Cointegration and Causality Analysis

Environment, Development and Sustainability, 17, 1, 137-153, ISSN: 1387-585X

17 Pages Posted: 26 Jan 2015 Last revised: 16 Oct 2015

See all articles by Cosimo Magazzino

Cosimo Magazzino

University of Rome III; Royal Economic Society; Italian Economic Association

Date Written: 2015

Abstract

The aim of this article was to assess the empirical evidence of the nexus between GDP and energy consumption for Italy during the period 1970-2009, using a time series approach. After a brief introduction, a survey of the economic literature on this issue is shown, before discussing the data and introducing some econometric techniques. Stationarity tests reveal that both series are nonstationary, or I(1). Moreover, a cointegration relationship is found between the two variables. The short-run dynamics of the variables show that the flow of causality runs from energy use to GDP, and there is a long-run bidirectional causal relationship (or feedback effect) between the two series. Consequently, we conclude that energy is a limiting factor to GDP growth in Italy and that energy conservation policy should be formulated and implemented wisely.

Keywords: Energy policies; Energy consumption; GDP; Stationarity; Cointegration; Causality; Italy

JEL Classification: B22; C22; N54; Q43

Suggested Citation

Magazzino, Cosimo, Energy Consumption and GDP in Italy: Cointegration and Causality Analysis (2015). Environment, Development and Sustainability, 17, 1, 137-153, ISSN: 1387-585X, Available at SSRN: https://ssrn.com/abstract=2555170

Cosimo Magazzino (Contact Author)

University of Rome III ( email )

Via Ostiense 139
Rome, RM 00154
Italy

HOME PAGE: http://scienzepolitiche.uniroma3.it/cmagazzino/

Royal Economic Society ( email )

London
United Kingdom

Italian Economic Association ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy

HOME PAGE: http://www.siecon.org/online/en/

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