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Does financial development intensify energy consumption in Saudi Arabia?

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  • Mahalik, Mantu Kumar
  • Babu, M. Suresh
  • Loganathan, Nanthakumar
  • Shahbaz, Muhammad

Abstract

Using annual data for the period 1971–2011, this study explores the relationship between financial development and energy consumption for Saudi Arabia by endogenizing economic growth, capital and urbanization as additional determinants in the energy demand function. The combined cointegration test proposed by Bayer-Hanck (2013) is used to estimate the long-run and short-run relationships among the series. The robustness of cointegration results is also tested by employing Pesaran’s et al. (2001) Autoregressive Distributed Lag (ARDL) model accommodating structural break in the series. Both conventional and structural break unit root tests are applied in order to test the stationarity properties of the series. The causal relationship between the variables is further investigated by applying Innovative Accounting Approach (IAA).

Suggested Citation

  • Mahalik, Mantu Kumar & Babu, M. Suresh & Loganathan, Nanthakumar & Shahbaz, Muhammad, 2017. "Does financial development intensify energy consumption in Saudi Arabia?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 1022-1034.
    • Handle: RePEc:eee:rensus:v:75:y:2017:i:c:p:1022-1034
    DOI: 10.1016/j.rser.2016.11.081
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    Keywords

    Financial Development; Energy Consumption; Saudi Arabia;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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