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Nonlinear unit root and nonlinear causality in natural gas - economic growth nexus: Evidence from Nigeria

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  • Galadima, Mukhtar Danladi
  • Aminu, Abubakar Wambai

Abstract

This paper carries out an econometric examination of nonlinear unit root and nonlinear causality in the natural gas-economic growth nexus in Nigeria. The techniques employed include the Kapetanios-Shin-Shell (KSS) nonlinear unit root test, Kruse nonlinear unit root test, Brock-Dechert-Scheinkman (BDS) nonlinearity test, Nonlinear Ordinary Least Squares (NOLS) model, and, the Hatemi-J asymmetric causality test. The results revealed that natural gas consumption and economic growth series follow nonlinear trend process as indicated by the KSS and Kruse tests, and that the relationship between natural gas consumption and economic growth in Nigeria is nonlinear as confirmed by the BDS and NOLS tests, where an increase in natural gas consumption increases economic growth. The asymmetric causality test revealed evidence of bidirectional causality between the positive impact of natural gas consumption and economic growth, and, unidirectional causality running from economic growth to negative impact of natural gas consumption. For further research, the paper suggests extending the discussions on the trend process of energy consumption to the Organization of Petroleum Exporting Countries (OPEC) or to other regional energy organizations using panel data techniques.

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  • Galadima, Mukhtar Danladi & Aminu, Abubakar Wambai, 2020. "Nonlinear unit root and nonlinear causality in natural gas - economic growth nexus: Evidence from Nigeria," Energy, Elsevier, vol. 190(C).
    • Handle: RePEc:eee:energy:v:190:y:2020:i:c:s0360544219321103
    DOI: 10.1016/j.energy.2019.116415
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    More about this item

    Keywords

    Nonlinear unit root; Nonlinear relationship; Nonlinear causality; Natural gas consumption; Economic growth;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • 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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