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The causal relationship between Indian energy consumption and the GDP: A shift from conservation to feedback hypothesis post economic liberalisation

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  • Saakshi CHAUHAN

    (National Mission on Himalayan Studies and Kumaun University, Uttarakhand, India)

  • Rajnish PANDE

    (Kumaun University, Uttarakhand, India)

  • Subrat SHARMA

    (Centre for Environmental Assessment and Climate Change, Uttarakhand, India)

Abstract

Fossil fuels are the main source of energy generation, which on one hand induces development and on the other hand increases emissions. This creates a dissonance between energy consumption and economic growth. In the recent years, liberalisation and policy transformations took place in India rapidly particularly after the 1990s. Therefore we developed relationship between per capita energy consumption and economic growth (Gross Domestic Product as an indicator) for this era (1991-2014). Toda-Yamamoto causality test framework of vector autoregressive model was used to test the relationship between the two. In contrast to earlier studies, our results present a bidirectional causality which shows that economic growth demands energy vis-a-vis energy consumption induces economic growth. Harmonized implications of these results are crucial input to policy purposes for inclusive development.

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  • Saakshi CHAUHAN & Rajnish PANDE & Subrat SHARMA, 2020. "The causal relationship between Indian energy consumption and the GDP: A shift from conservation to feedback hypothesis post economic liberalisation," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(624), A), pages 203-212, Autumn.
    • Handle: RePEc:agr:journl:v:3(624):y:2020:i:3(624):p:203-212
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