Energy Consumption and Economic Growth Linkage: Global Evidence from Symmetric and Asymmetric Simulations

Variable	Obs	Mean	Std. dev.	Min	Max	Coef of variation
Whole sample
GDPG	3,431	1.715	4.945	−64.99	53.97	2.88
EU	3,431	2,130.886	2,369.316	99.71	18,178.141	0.011
BRICS
GDPG	114	6.823461	3.996938	−7.3881	13.63833	0.585
EU	114	842.0321	559.7145	279.380	2,236.730	0.664
Next Eleven
GDPG	418	2.49	4.55	−30.18	22.12	1.82
EU	418	958.1	930.15	99.70	5,248.5	0.97
ECO
GDPG	114	1.40	6.05	−30.18	22.14	4.32
EU	114	1,064.1	680.6	302.54	2,889.10	0.63
Big Four in Western Europe
GDPG	152	1.66	1.78	−5.46	5.87	1.07
EU	152	4,053.8	341.3	3,172.8	4,658.3	0.048
Asia-Pacific region
GDPG	570	3.47	3.47	−14.35	13.64	1
EU	570	944.23	1,122.8	99.71	4,083.8	1.189
Group of Seven
GDPG	266	1.66	2.10	−7.94	6.33	1.26
EU	266	4,770.7	1,970.9	2,203.8	8,455.5	0.41
Arab League
GDPG	418	1.148	5.10	−25.61	11.83	4.44
EU	418	1,811.7	1,903.7	235.18	6,871.8	1.05
SAARC region
GDPG	190	3.01	2.35	−7.39	9	0.78
EU	190	334.7	119.6	99.71	636.5	0.35

[i] BRICS – Brazil, Russia, India, China, and South Africa; ECO – Economic Cooperation Organization; SAARC – South Asian Association for Regional Cooperation; GDPG – GDP growth ; Obs – Observations.

[ii] Source: own elaboration.

Table 2

CD test results (Pesaran’s test 2004).

Variables	CD-test	P-value	Average joint T	Mean Ï	Mean abs (Ï)
GDP growth per capita	21.417	0.000	37.95	0.06	0.18
Energy use	102.57	0.000	37.95	0.27	0.54

[i] Notes: Under the null hypothesis of cross-sectional independence, CD ~ N (0, 1) P-values close to zero indicate data are correlated across panel groups.

[ii] CD – cross-sectional dependence.

[iii] Source: own elaboration.

Table 3

Unit root test results in the presence of cross-section dependence (Pesaran’s test 2007).

Variables	Level				First difference
Variables	CIPS (−1)	CIPS (−2)	CIPS (−3)	Critical value (5%)	CIPS (−1)	CIPS (−2)	CIPS (−3)	Critical value (5%)
No intercept no trend
GDP growth	−1.231	−3.761	−3.774	−1.52	−5.963	−5.935	−5.934	−1.52
Energy use	−1.134	−1.267	−1.268	−1.52	−5.097	−4.940	−4.883	−1.52
Only intercept
GDP growth	−1.107	−4.107	−4.107	−2.08	−5.977	−5.977	−5.977	−2.08
Energy use	−1.606	−1.606	−1.606	−2.08	−5.272	−5.272	−5.272	−2.08
Linear trend
GDP growth	−2.48	−4.470	−4.453	−2.56	−6.206	−6.161	−6.181	−2.65
Energy use	−1.836	−1.936	−1.893	−2.56	−5.537	−5.461	−5.410	−2.65

[i] Notes: H0 (homogeneous non-stationary): bi = 0 for all i.

[ii] Source: own elaboration.

Table 4

Panel co-integration test (Westerlund’s test 2007).

	Statistics	Model with intercept			Model with trend
	Statistics	Value	Z-value	P-value	Value	Z-value	P-value
BRICS	Gt	−4.369	−4.997	0.000	−4.010	−3.504	0.000
	Ga	−23.489	−5. 201	0.000	−24.688	−3.229	0.001
	Pt	−6.332	−3.847	0.000	−5.953	−2.623	0.004
	Pa	−22.190	−7.007	0.000	−22.953	−3.961	0.000
Next Eleven	Gt	−1.728	0.183	0.573	−2.421	−0.222	0.412
	Ga	−4.998	1.307	0.904	−7.746	2.081	0.981
	Pt	−0.595	4.231	1.000	−4.915	2.391	0.992
	Pa	−0.242	2.980	0.999	−2.942	3.241	0.999
ECO	Gt	−0.243	2.959	0.999	−2.033	0.710	0.761
	Ga	−1.599	1.764	0.961	−3.251	2.231	0.987
	Pt	0.770	3.297	1.000	−1.724	2.213	0.987
	Pa	0.587	1.879	0.970	−2.306	1.872	0.969
Big Four in Western Europe	Gt	−2.295	−1.152	0.125	−2.696	−0.812	0.208
	Ga	−12.127	−1.832	0.034	−11.706	0.090	0.536
	Pt	0.697	3.613	1.000	−3.092	1.295	0.902
	Pa	0.828	2.279	0.989	−3.719	1.701	0.956
Asia-Pacific region	Gt	−2.365	−2.530	0.006	−2.421	−0.261	0.397
	Ga	−12.430	−3.762	0.000	−13.242	−0.701	0.242
	Pt	−9.287	−3.702	0.000	−8.028	0.176	0.570
	Pa	−11.345	−6.207	0.000	−11.655	−1.720	0.043
Group of Seven	Gt	−2.633	−2.520	0.006	−2.831	−1.513	0.065
	Ga	−13.333	−3.009	0.001	−12.795	−0.305	0.380
	Pt	−2.293	1.546	0.939	−3.871	1.964	0.975
	Pa	−3.147	0.646	0.741	−4.877	1.750	0.960
Arab League	Gt	−1.629	0.548	0.708	−1.777	2.405	0.992
	Ga	−100.936	−57.145	0.000	−67.851	−27.235	0.000
	Pt	−2.223	2.593	0.995	−1.630	6.147	1.000
	Pa	−1.901	1.740	0.959	−1.806	3.855	1.000
SAARC region	Gt	−2.532	−1.877	0.030	−2.579	−0.584	0.280
	Ga	−14.997	−3.226	0.001	−13.943	−0.635	0.263
	Pt	−5.671	−2.448	0.007	−4.531	0.220	0.587
	Pa	−15.506	−5.679	0.000	−14.606	−2.069	0.019
World sample	Gt	−2.715	−1.807	0.035	−2.331	0.077	0.530
	Ga	−9.223	−0.662	0.254	−9.136	0.733	0.768
	Pt	−2.751	−0.245	0.403	−2.054	1.835	0.967
	Pa	−2.694	0.599	0.726	−4.068	1.374	0.915

[i] BRICS – Brazil, Russia, India, China, and South Africa; ECO – Economic Cooperation Organization; SAARC – South Asian Association for Regional Cooperation.

[ii] Source: own elaboration.

Table 5

Asymmetric co-integration results of Hatemi-J’s test (2020).

	Variables	Kao test results
	Variables	Im et al. (2003) unit root test results on residuals	Decision regarding residuals
Arab League	Y⁺, X⁺	−2.4916 (0.0003)	I (0), Stationary
	Y⁺, X⁻	−2.7552 (0.000)	I (0), Stationary
	Y⁻, X⁻	−2.7677 (0.000)	I (0), Stationary
	Y⁻, X⁺	−2.6207 (0.000)	I (0), Stationary
Asia-Pacific region	Y⁺, X⁺	−2.6571 (0.000)	I (0), Stationary
	Y⁺, X⁻	−2.9797 (0.000)	I (0), Stationary
	Y⁻, X⁻	−2.3041 (0.003)	I (0), Stationary
	Y⁻, X⁺	−2.4447 (0.0001)	I (0), Stationary
Big Four in Western Europe	Y⁺, X⁺	−4.0673 (0.000)	I (0), Stationary
	Y⁺, X⁻	−3.2235 (0.000)	I (0), Stationary
	Y⁻, X⁻	−2.5821 (0.012)	I (0), Stationary
	Y⁻, X⁺	−2.6298 (0.010)	I (0), Stationary
ECO	Y⁺, X⁺	−3.5681 (0.0004)	I (0), Stationary
	Y⁺, X⁻	−2.5875 (0.025)	I (0), Stationary
	Y⁻, X⁻	−2.8706 (0.013)	I (0), Stationary
	Y⁻, X⁺	−2.7547 (0.013)	I (0), Stationary
Group of Seven	Y⁺, X⁺	−3.2938 (0.000)	I (0), Stationary
	Y⁺, X⁻	−3.3661 (0.000)	I (0), Stationary
	Y⁻, X⁻	−2.5256 (0.002)	I (0), Stationary
	Y⁻, X⁺	−2.5917 (0.001)	I (0), Stationary
Next Eleven	Y⁺, X⁺	−1.9333 (0.081)	I (0), Stationary
	Y⁺, X⁻	−1.7222 (0.301)	I (0), Stationary at 10%
	Y⁻, X⁻	−2.0643 (0.021)	I (0), Stationary
	Y⁻, X⁺	−2.0375 (0.026)	I (0), Stationary
World sample	Y⁺, X⁺	−2.3252 (0.000)	I (0), Stationary
	Y⁺, X⁻	−2.6464 (0.000)	I (0), Stationary
	Y⁻, X⁻	−2.6051 (0.000)	I (0), Stationary
	Y⁻, X⁺	−2.4566 (0.000)	I (0), Stationary

[i] ECO – Economic Cooperation Organization.

[ii] Source: own elaboration.

Table 6

Linear ARDL results.

ΔY	MG (BRICS)	PMG (SAARC)
ECT	−0.008^* (0.043)	−0.0064577 (0.389)
Long-run effect	−0.829^* (0.000)	−1.040631^* (0.000)
Short run effect	0.054^* (0.001)	0.0496974^* (0.006)
_cons	4.914^* (0.000)	2.895211^* (0.000)
Hausman test H₀ = PMG H₁ = MG	7.51^** (0.0234)	0.21 (0.6462)
Wald test (long-run asymmetry)	1.75 (0.1855)	1.09 (0.2971)
Wald test (short-run asymmetry)	1.26 (0.2616)	0.42 (0.5146)
Log likelihood		−366.9499

[i] Notes: The P-values are given [* at 1%, ** at 5%].

[ii] ARDL – autoregressive distributed lag; BRICS – Brazil, Russia, India, China, and South Africa; PMG – Pooled Mean Group; SAARC – South Asian Association for Regional Cooperation; ECT – error correction term.

[iii] Source: own elaboration.

Variables	Arab League		Asia-Pacific region		Big Four in Western Europe		ECO
Variables	ΔY⁺	ΔY⁻	ΔY⁺	ΔY⁻	ΔY⁺	ΔY⁻	ΔY⁺	ΔY⁻
ECT	−0.585^* (0.000)	−0.409^* (0.000)	−0.520^* (0.000)	−0.455^* (0.000)	−0.415^* (0.000)	−0.577^* (0.000)	−0.260^** (0.033)	−0.598 (0.000)
${eu}_{t}^{+}$	−0.0080^* (0.000)	0.0047^* (0.001)	−0.0114 (0.000)	0.014^* (0.000)	−0.005^** (0.030)	−0.002^* (0.992)	0.069 (0.009)	−0.025 (0.012)
${eu}_{t}^{-}$	0.003^** (0.011)	0.0054^* (0.002)	0.0242^* (0.000)	−0.028^* (0.000)	0.025^* (0.000)	−0.011^* (0.000)	0.220^* (0.001)	−0.065 (0.000)
$Δ {eu}_{t}^{+}$	0.0011 (0.267)	−0.0006 (0.974)	−0.046^** (0.052)	0.045^** (0.045)	0.001 (0.914)	−0.007 (0.393)	0.036 (0.061)	−0.021 (0.078)
$Δ {eu}_{t}^{-}$	0.952 (0.267)	0.051 (0.242)	0.006 (0.874)	0.001 (0.974)	0.0019 (0.595)	0.028 (0.929)	0.018 (0.490)	0.002 (0.894)
$Δ {eu}_{t - 1}^{+}$	0.005 (0.703)	−0.006 (0.686)	−0.018 (0.146)	0.018 (0.084)	0.004 (0.318)	−0.002 (0.456)	0.023 (0.166)	−0.020 (0.217)
$Δ {eu}_{t - 1}^{-}$	−0.103 (0.290)	0.105 (0.269)	0.060 (0.619)	−0.038 (0.689)	−0.002 (0.579)	0.004 (0.238)	−0.012 (0.445)	0.013 (0.424)
Constant	2.328^* (0.005)	−6.688 (0.229)	−0.296 (0.862)	−3.550^** (0.013)	−1.984 (0.173)	−1.281 (0.368)	3.920 (0.725)	−2.563 (0.783)
Hausman (χ²) H₀ = PMG H₁ = MG	3.17 (0.2054)		1.55 (0.461)		3.56 (0.613)		2.32 (0.192)
Wald test (long-run asymmetry)	3.320^** (0.0367)		5.69^* (0.002)		5.61^** (0.020)		7.76^* (0.005)
Wald test (short-run asymmetry)	0.031 (0.142)		0.29 (0.370)		0.91 (0.213)		0.12 (0.730)
Log likelihood	−1176.886		−1072.3		−193.7512		−258.049

[i] Notes: P values are given in [], where eu is energy use; *1%; **5%; ARDL – autoregressive distributed lag; ECO – Economic Cooperation Organization; ECT – error correction term.

Variables	Group of Seven		Next Eleven		World sample
Variables	ΔY⁺	ΔY⁻	ΔY⁺	ΔY⁻	ΔY⁺	ΔY⁻
ECT	−0.427^* (0.000)	−0.5535^* (0.000)	−0.458^* (0.000)	−0.413^* (0.000)	−0.494^* (0.000)	−0.446^* (0.000)
${eu}_{t}^{+}$	−0.006^* (0.000)	0.021^** (0.036)	0.034^* (0.007)	−0.036^* (0.000)	−0.001^** (0.013)	0.001^* (0.003)
${eu}_{t}^{-}$	0.021^* (0.000)	−0.013^* (0.000)	0.440^* (0.000)	0.066^* (0.000)	0.015^* (0.000)	−0.011^* (0.000)
$Δ {eu}_{t}^{+}$	−0.061 (0.466)	−0.049 (0.710)	−1.114 (0.264)	1.167 (0.242)	−0.004 (0.577)	0.005 (0.544)
$Δ {eu}_{t}^{-}$	0.026 (0.243)	−0.002 (0.290)	1.337^** (0.026)	−1.217^** (0.036)	−0.005 (0.480)	0.005 (0.463)
$Δ {eu}_{t - 1}^{+}$	0.011 (0.992)	−0.009 (0.627)	0.945 (0.257)	−0.955 (0.259)	−0.010 (0.397)	0.011 (0.380)
$Δ {eu}_{t - 1}^{-}$	−0.001 (0.626)	0.009 (0.396)	−0.339 (0.640)	0.436 (0.556)	−0.003 (0.794)	0.004 (0.747)
Constant	−1.813 (0.075)	−1.394 (0.145)	−296.64^* (0.006)	−71.781 (0.121)	1.881744 (0.236)	−5.050^* (0.001)
Hausman (χ²) H₀ = PMG H₁ = MG	2.17 (0.250)		2.55 (0.601)		4.17 (0.542)
Wald test (long-run asymmetry)	4.05^** (0.0443)		7.76^* (0.005)		5.76^** (0.051)
Wald test (short-run asymmetry)	0.07 (0.7917)		0.12 (0.730)		0.83 (0.305)
Log likelihood	−284.11		111.42		−3620.302

[i] P values are given in (), where eu is energy use; *1%; **5%.

[ii] Source: own elaboration.

Table 8

The result of Dumitrescu and Hurlin’s (2012) panel causality test.

	Null hypothesis	W-stat	Z-bar	P-value	Lag
Arab League	Real GDP per capita does not Granger-cause energy use	3.50237	5.13479	3.E−07	1
Arab League	Energy use does not Granger-cause real GDP per capita	1.88856	1.73847	0.0821	1
Asia-Pacific region	Real GDP per capita does not Granger-cause energy use	2.58086	0.74883	0.4540	2
Asia-Pacific region	Energy use does not Granger-cause real GDP per capita	5.58611	5.82965	6.E−09	2
Big Four in Western Europe	Real GDP per capita does not Granger-cause energy use	3.36903	2.92718	0.0034^*	1
Big Four in Western Europe	Energy use does not Granger-cause real GDP per capita	1.34434	0.35767	0.7206	1
BRICS	Real GDP per capita does not Granger-cause energy use	0.83674	−0.24812	0.8040	1
BRICS	Energy use does not Granger-cause real GDP per capita	2.77734	1.88470	0.0595	1
ECO	Real GDP per capita does not Granger-cause energy use	16.2136	16.6519	0.0000^*	1
ECO	Energy use does not Granger-cause real GDP per capita	2.49738	1.57701	0.1148	1
Group of Seven	Real GDP per capita does not Granger-cause energy use	10.4306	15.7275	0.0000^*	1
Group of Seven	Energy use does not Granger-cause real GDP per capita	2.98822	3.23298	0.0012^*	1
Next Eleven	Real GDP per capita does not Granger-cause energy use	4.69690	7.64871	2.E−14	1
Next Eleven	Energy use does not Granger-cause real GDP per capita	5.20540	8.71888	0.0000^*	1
SAARC	Real GDP per capita does not Granger-cause energy use	1.02665	−0.05086	0.9594	1
SAARC	Energy use does not Granger-cause real GDP per capita	9.77719	12.3651	0.0000^*	1
World sample	Real GDP per capita does not Granger-cause energy use	5.74984	26.7688	0.0000^*	1
World sample	Energy use does not Granger-cause real GDP per capita	2.23745	6.70996	2.E−11	1

[i] Notes: We computed the probability values using large iterative bootstrap identifications; W-Stat statistic presents the averages from cross-sections of N standard individual Wald statistics of Granger non-causality tests. The Z-bar statistic is a standardised statistic.

[ii] BRICS – Brazil, Russia, India, China, and South Africa; ECO – Economic Cooperation Organization; SAARC – South Asian Association for Regional Cooperation.

[iii] Source: own elaboration.

Table A1

Groupwise list of selected countries for the study.

Group	Countries	Number of countries
BRICS	China, India, Brazil	3
Next Eleven	Indonesia, Pakistan, Bangladesh, Philippines, Vietnam, Egypt, Iran, Turkey, Republic of Korea, Nigeria, Mexico	11
Economic Cooperation Organization	Pakistan, Iran, Turkey	3
Big Four in Western Europe	Germany, France, Italy, United Kingdom	4
Asia-Pacific region	China, India, Indonesia, Pakistan, Bangladesh, Japan, Philippine, Thailand, Myanmar, Malaysia, Nepal, Argentina, Australia, Austria	15
Group of Seven	Japan, Canada, Germany, France, United States, Italy, United Kingdom	7
Arab League	Algeria, Egypt, Saudi Arabia, Sudan, Oman, Morocco, Jordan, Iraq, United Arab Emirates, Syria, Tunisia,	11
SAARC	India, Pakistan, Bangladesh, Nepal, Sri-Lanka	5
World sample	United Arab Emirates, Argentina, Australia, Austria, Belgium, Benin, Bangladesh, Bolivia, Brazil, Canada, Switzerland, Chile, China, Cote d’Ivoire, Cameroon, Democratic Republic of Congo, Republic of Colombia, Costa Rica, Cuba, Cyprus, Germany, Denmark, Dominican Republic, Algeria, Ecuador, Arab Republic of Egypt, Spain, Finland, France, Gabon, United Kingdom, Ghana, Greece, Guatemala, Hong Kong SAR, China, Honduras, Haiti, India, Ireland, Islamic Republic of Iran, Iraq, Iceland, Israel, Italy, Jamaica, Jordan, Japan, Kenya, Republic of Korea, Sri Lanka, Luxembourg, Morocco, Mexico, Malta, Myanmar, Malaysia, Nigeria, Nicaragua, Netherlands, Norway, Nepal, New Zealand, Oman, Pakistan, Panama, Peru, Philippines, Portugal, Paraguay, Saudi Arabia, Sudan, Senegal, Singapore, El Salvador, Sweden, Thailand, Tunisia, Turkey, Uruguay, United States, Zambia.	85

[i] BRICS – Brazil, Russia, India, China, and South Africa; SAARC – South Asian Association for Regional Cooperation.

[ii] Source: own elaboration.

References

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Articles in this issue

DOI: https://doi.org/10.2478/quageo-2022-0012 | Journal eISSN: 2081-6383 | Journal ISSN: 2082-2103 (formerly 0137-477X)

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Language: English

Page range: 67 - 82

Submitted on: Jul 3, 2021

Published on: Jun 24, 2022

Published by: Adam Mickiewicz University

In partnership with: Paradigm Publishing Services

Keywords:

energy consumption,

economic growth,

NARDL,

co-integration

JEL:

C33,

O44,

O50,

Q43w

Related subjects:

Geosciences,

Geography

© 2022 Wajid Ali, Solomon Prince Nathaniel, Ibrahim Ayoade Adekunle, Bezon Kumar, published by Adam Mickiewicz University
This work is licensed under the Creative Commons Attribution 4.0 License.

Volume 41 (2022): Issue 2 (June 2022)