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GDP, energy consumption and financial development in Italy

Cosimo Magazzino (Department of Political Sciences, Roma Tre University, Rome, Italy)

International Journal of Energy Sector Management

ISSN: 1750-6220

Article publication date: 14 September 2017

Issue publication date: 20 March 2018




This study aims to explore the relationship among energy consumption, real income, financial development and oil prices in Italy over the period 1960-2014.


Different econometric techniques – such as the General Methods of Moment (GMM) or the AutoRegressive Distributed Lags (ARDL) bounds test – are usually used in the empirical analysis. Moreover, both the Toda and Yamamoto causality tests and the Granger causality tests are applied to the data.


The results of unit root and stationarity tests show that the variables are non-stationary at levels, but stationary in first-differences form, or I(1). The ARDL bounds F-test reveals an evidence of a long-run relationship among the four variables at 1% significance level. Moreover, an increase in real GDP and oil prices has a significant effect on energy consumption in the long run. The coefficients of estimated error correction term are also negative and statistically significant. In addition, the paper explores the causal relationship between the variables by using a VAR framework, with Toda and Yamamoto but also Granger causality tests, within both multivariate and bivariate systems. The findings indicate that energy consumption is affected by real GDP.


The study also filled the literature gap of applying ARDL technique to examine this relevant issue for Italy.



The author thanks the participants to the conference “Energy Quest 2016”, International Conference on Energy Production and Management in the 21st Century, 6-8 September 2016, Ancona, Italy, for their useful comments and advices. The author is also indebted to the anonymous referees and the editor for their valuable suggestions. However, the usual caveats apply.


Magazzino, C. (2018), "GDP, energy consumption and financial development in Italy", International Journal of Energy Sector Management, Vol. 12 No. 1, pp. 28-43.



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