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The Causal Relationship between Primary Energy Consumption and Economic Growth in Israel: A Multivariate Approach

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  • Magazzino, Cosimo
  • Schneider, Nicolas

Abstract

The empirical relationship among energy and economic growth has been abundantly studied in the literature. In this paper, we provide a state-of-the-art review of the topic, and highlight the main methodological issues that previous studies have attempted to address so far. Since Israel is experiencing profound energy changes, we take this case as an illustration and investigate the causal link between primary energy consumption and economic growth. Capital and labour are included in the model with multivariate framework. A cointegrating relationship is found among the variables. Causality tests' results display both short-run and long-run relationship between economic growth and primary energy consumption. Besides, a unidirectional causality running from economic growth to primary energy consumption is supported. Since the primary energy consumed in Israel is overwhelmingly oil, natural gas and coal, we support the economic growth-led-primary energy consumption hypothesis. In line with previous studies, our findings suggest that promoting low-carbon energy sources through fossil conservation policies may not significantly hinder economic growth.

Suggested Citation

  • Magazzino, Cosimo & Schneider, Nicolas, 2020. "The Causal Relationship between Primary Energy Consumption and Economic Growth in Israel: A Multivariate Approach," International Review of Environmental and Resource Economics, now publishers, vol. 14(4), pages 417-491, December.
    • Handle: RePEc:now:jirere:101.00000121
    DOI: 10.1561/101.00000121
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    Citations

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    Cited by:

    1. Magazzino, Cosimo & Drago, Carlo & Schneider, Nicolas, 2023. "Evidence of supply security and sustainability challenges in Nigeria’s power sector," Utilities Policy, Elsevier, vol. 82(C).
    2. Magazzino, Cosimo & Mele, Marco & Schneider, Nicolas, 2021. "A D2C algorithm on the natural gas consumption and economic growth: Challenges faced by Germany and Japan," Energy, Elsevier, vol. 219(C).
    3. Magazzino, Cosimo & Mele, Marco & Morelli, Giovanna & Schneider, Nicolas, 2021. "The nexus between information technology and environmental pollution: Application of a new machine learning algorithm to OECD countries," Utilities Policy, Elsevier, vol. 72(C).
    4. Magazzino, Cosimo & Mele, Marco & Schneider, Nicolas, 2022. "A new artificial neural networks algorithm to analyze the nexus among logistics performance, energy demand, and environmental degradation," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 315-328.
    5. Shahzad, Umer & Schneider, Nicolas & Ben Jebli, Mehdi, 2021. "How coal and geothermal energies interact with industrial development and carbon emissions? An autoregressive distributed lags approach to the Philippines," Resources Policy, Elsevier, vol. 74(C).
    6. Cosimo Magazzino & Marco Mele & Giovanna Morelli, 2021. "The Relationship between Renewable Energy and Economic Growth in a Time of Covid-19: A Machine Learning Experiment on the Brazilian Economy," Sustainability, MDPI, vol. 13(3), pages 1-22, January.
    7. Georgeta Soava & Anca Mehedintu, 2023. "Final Energy Consumption—Growth Nexus in Romania Versus the European Union: A Sectoral Approach Using Neural Network," Energies, MDPI, vol. 16(2), pages 1-34, January.
    8. Muhammad Zahid Rafique & Nicolas Schneider & Umer Shahzad & Malin Song, 2022. "High‐tech industries, financial expansion, and low‐carbon energy deployment along the Belt and Road Initiative," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1779-1795, December.
    9. Schneider, Nicolas & Strielkowski, Wadim, 2023. "Modelling the unit root properties of electricity data—A general note on time-domain applications," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 618(C).
    10. Magazzino, Cosimo & Alola, Andrew Adewale & Schneider, Nicolas, 2021. "The trilemma of innovation, logistics performance, and environmental quality in 25 topmost logistics countries: a quantile regression evidence," LSE Research Online Documents on Economics 117654, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Energy consumption; GDP; employment; capital stock; Israel; time-series;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F10 - International Economics - - Trade - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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