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Causal Relationship between Fossil Fuel Consumption and Economic Growth in Japan: A Multivariate Approach

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  • Hazuki ISHIDA

    (Fukushima University, Faculty of Symbiotic Systems Science, Fukushima, Japan)

Abstract

This paper explores whether Japanese economy can continue to grow without extensive dependence on fossil fuels. The paper conducts time series analysis using a multivariate model of fossil fuels, non-fossil energy, labor, stock and GDP to investigate the relationship between fossil fuel consumption and economic growth in Japan. The results of cointegration tests indicate long-run relationships among the variables. Using a vector error-correction model, the study reveals bidirectional causality between fossil fuels and GDP. The results also show that there is no causal relationship between non-fossil energy and GDP. The results of cointegration analysis, Granger causality tests, and variance decomposition analysis imply that non-fossil energy may not necessarily be able to play the role of fossil fuels. Japan cannot seem to realize both continuous economic growth and the departure from dependence on fossil fuels. Hence, growth-oriented macroeconomic policies should be re-examined.

Suggested Citation

  • Hazuki ISHIDA, 2013. "Causal Relationship between Fossil Fuel Consumption and Economic Growth in Japan: A Multivariate Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 3(2), pages 127-136.
    • Handle: RePEc:eco:journ2:2013-02-2
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    2. Esma Erdoğan & Duygu Serin Oktay & Müge Manga & Harun Bal & Neşe Algan, 2024. "Examining the Effects of Renewable Energy and Economic Growth on Carbon Emission in Canada: Evidence from the Nonlinear ARDL Approaches," Evaluation Review, , vol. 48(1), pages 63-89, February.
    3. Menegaki, Angeliki N. & Tugcu, Can Tansel, 2017. "Energy consumption and Sustainable Economic Welfare in G7 countries; A comparison with the conventional nexus," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 892-901.
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    5. Fang, Zheng & Chang, Youngho, 2016. "Energy, human capital and economic growth in Asia Pacific countries — Evidence from a panel cointegration and causality analysis," Energy Economics, Elsevier, vol. 56(C), pages 177-184.
    6. Ahmad, Ashfaq & Zhao, Yuhuan & Shahbaz, Muhammad & Bano, Sadia & Zhang, Zhonghua & Wang, Song & Liu, Ya, 2016. "Carbon emissions, energy consumption and economic growth: An aggregate and disaggregate analysis of the Indian economy," Energy Policy, Elsevier, vol. 96(C), pages 131-143.
    7. Sodik Dwi Purnomo & Nur Wani & Suharno Suharno & Arintoko Arintoko & Herman Sambodo & Lilis Siti Badriah, 2023. "The Effect of Energy Consumption and Renewable Energy on Economic Growth in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 13(1), pages 22-30, January.
    8. Majed S. Almozaini, 2019. "The Causality Relationship between Economic Growth and Energy Consumption in The World s top Energy Consumers," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 40-53.

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    More about this item

    Keywords

    Fossil fuels; Economic growth; Cointegration; Granger causality;
    All these keywords.

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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