Revisiting the energy consumption–economic growth causal relationships in tails
Abstract
Purpose
The purpose of this paper is to investigate the relationship between the energy consumption and the economic growth in the USA and in a sectoral level by using monthly data from January 1991 to May 2016.
Design/methodology/approach
While assessing the relationship at a country level, the authors also examine five sectors by using quantile causality.
Findings
The findings indicate the existence of a causality at the sectoral level in tails. More specifically, industrial and electric sectors cause the growth at the lower and higher levels. Residential, commercial and transportation sectors do not cause the growth in all levels. Total consumption causes the growth in the middle and low levels but not in the high level. Finally, the empirical evidence signifies an asymmetric relationship between the covariates.
Practical implications
The results imply that when the consumption deals conditions with fluctuation, it is likely to be affected by growth. In such a case, energy policies gear toward reducing or increasing energy intensity, improving energy efficiency, encouraging the use of alternative sources and investing in the development of technology.
Originality/value
The authors use, for the first time, the quantile causality for the case of energy consumption and economic growth. The quantile test is useful for a thorough comprehension of the causal relationship for this area. Compared to the OLS, which is used for the majority of causality tests, the quantile investigates the causality at the sectoral level in the tails.
Keywords
Acknowledgements
The authors would like to thank the Editor, Professor Mohsen Bahmani-Oskooee, and the reviewers for their constructive comments on an earlier version of the manuscript. Any remaining errors are solely the authors’ responsibility. The authors of this paper have not made their research data set openly available. Any enquiries regarding the data set can be directed to the corresponding author.
Citation
Tzeremes, P. (2018), "Revisiting the energy consumption–economic growth causal relationships in tails", Journal of Economic Studies, Vol. 45 No. 5, pp. 898-909. https://doi.org/10.1108/JES-07-2017-0176
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited