The Effect of Scale, Technique, Composition and Trade Openness on Energy Demand: Fresh Evidence from Malaysia

Shahbaz, M., Alam, M.M., Uddin, G.S., Nanthakumar, L. 2016. The Effect of Scale, Technique, Composition and Trade Openness on Energy Demand: Fresh Evidence from Malaysia. Bulletin of Energy Economics, Vol. 4(3), pp. 280-296.

18 Pages Posted: 31 Mar 2017

See all articles by Muhammad Shahbaz

Muhammad Shahbaz

Comsats University Islamabad

Md. Mahmudul Alam

Universiti Utara Malaysia

Gazi Uddin

Presidency University

Loganathan Nanthakumar

Universiti Teknologi Malaysia (UTM)

Date Written: 2016

Abstract

The aim of this paper utilizes an energy demand model to investigate the impact of trade openness on energy consumption by incorporating scale and technique, composition and urbanization effects in the case of Malaysia. The study covers the sample period of 1970-2011 using quarter frequency data. We applied the bounds testing approach in the presence of structural breaks to examine the long run relationship between the variables. The VECM Granger causality is used to detect the direction of causality between the variables. Our findings indicate that growth effect (scale and technique effect) has a positive (negative) impact on energy consumption whereas composition effect stimulates energy demand in Malaysia. Energy consumption is positively influenced by both from openness and urbanization. This study opens new policy insights for policy making authorities to articulate a comprehensive energy and trade policy to sustain economic growth and improve the environmental quality of Malaysia.

Keywords: Trade Openness, Energy Demand, Malaysia

Suggested Citation

Shahbaz, Muhammad and Alam, Md. Mahmudul and Uddin, Gazi and Nanthakumar, Loganathan, The Effect of Scale, Technique, Composition and Trade Openness on Energy Demand: Fresh Evidence from Malaysia (2016). Shahbaz, M., Alam, M.M., Uddin, G.S., Nanthakumar, L. 2016. The Effect of Scale, Technique, Composition and Trade Openness on Energy Demand: Fresh Evidence from Malaysia. Bulletin of Energy Economics, Vol. 4(3), pp. 280-296.. Available at SSRN: https://ssrn.com/abstract=2943392

Muhammad Shahbaz

Comsats University Islamabad ( email )

Park Road
Chak Shahzad
Islamabad, North-West Frontier Province 44000
Pakistan

Md. Mahmudul Alam (Contact Author)

Universiti Utara Malaysia ( email )

Sintok, Kedah
Malaysia

Gazi Uddin

Presidency University ( email )

86/1 College Street
Kolkata, West Bengal 700073
India

Loganathan Nanthakumar

Universiti Teknologi Malaysia (UTM)

81310 Sekolah Agama
Johor Bahru, Johor
Malaysia

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