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Energy-Growth Nexus in Indonesia: Fresh Evidence from Asymmetric Causality Test

Author

Listed:
  • Ikhsan Ikhsan

    (Faculty of Economics and Business, Universitas Syiah Kuala, Indonesia,)

  • Kamal Fachrurrozi

    (Sekolah Tinggi Ilmu Manajemen (STIM) Banda Aceh, Indonesia,)

  • Muhammad Nasir

    (Politeknik Negeri Lhokseumawe, Indonesia,)

  • Elfiana Elfiana

    (Faculty of Agriculture, Universitas Almuslim, Indonesia,)

  • Nurjannah Nurjannah

    (Faculty of Economics, Universitas Samudra, Indonesia.)

Abstract

The purpose of this study is to examine the causality between energy consumption and economic growth with an asymmetric causality approach in Indonesia for the period of 1971-2014. Asymmetric causality using the Hatemi-J method (2012). Bootstrap simulation is also implemented because the data is not normally distributed and there is volatility to get a more reliable critical value than using asymptotic values. The first finding is that classical causality with Toda-Yamamoto finds no relationship between energy consumption and economic growth in Indonesia. The second finding shows that asymmetric causality shows no relationship between energy consumption and economic growth on a positive cumulative basis. However, the third finding obtained a bidirectional in negative cumulative. It is known that the impact of a decrease in energy consumption is greater on a decrease in economic growth than vice versa. Based on these findings, energy consumption in Indonesia has reached an optimal point so that additional energy consumption does not have an impact on economic growth. However, efforts to stabilize energy and economic growth are urgently needed.

Suggested Citation

  • Ikhsan Ikhsan & Kamal Fachrurrozi & Muhammad Nasir & Elfiana Elfiana & Nurjannah Nurjannah, 2022. "Energy-Growth Nexus in Indonesia: Fresh Evidence from Asymmetric Causality Test," International Journal of Energy Economics and Policy, Econjournals, vol. 12(1), pages 396-400.
    • Handle: RePEc:eco:journ2:2022-01-49
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    References listed on IDEAS

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    Cited by:

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    2. Wang, Lu & Ruan, Hang & Hong, Yanran & Luo, Keyu, 2023. "Detecting the hidden asymmetric relationship between crude oil and the US dollar: A novel neural Granger causality method," Research in International Business and Finance, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    Energy Consumption; Economic Growth; Asymmetric Causality;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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