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Energy Consumption and Industrial Production: Evidence from Tunisia at Both Aggregated and Disaggregated Levels

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  • Mehdi Abid
  • Rafaa Mraihi

Abstract

Energy in the industrial sector is considered among the most important factors because of its direct relationship with economic development. This paper investigates the causality between energy consumption and industrial production in Tunisia for the period 1980–2007. The main contribution of the study is to empirically investigate the relation of industrial production and energy consumption at both aggregated and disaggregated levels in relation to oil, natural gas, and electricity. Applying the technique to Granger causality, in both the short and long-run, our results reveal that industrial production causes gas consumption, but the Granger causality running in any direction between oil consumption and industry GDP does not exist. On the other hand, the short-run Granger causality exists from industry GDP to total energy consumption, while the neutrality hypothesis is supported in the long run. Also, there is a unidirectional causality running from electricity consumption to industry GDP in the long run, but the neutrality hypothesis is supported in the short run. Then the article proposes some suggestions for improving the energy policy the industry sector and which can reduce the energy use and contribute to sustainable development in Tunisia. For example, to reduce energy consumption, suggestions propose to substitute the use of fossil fuels by clean energy and renewable energy. In addition, improving energy efficiency in Tunisia recommends the development of national strategies limiting the relocation of obsolete industries and polluting activities. Copyright Springer Science+Business Media New York 2015

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  • Mehdi Abid & Rafaa Mraihi, 2015. "Energy Consumption and Industrial Production: Evidence from Tunisia at Both Aggregated and Disaggregated Levels," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(4), pages 1123-1137, December.
    • Handle: RePEc:spr:jknowl:v:6:y:2015:i:4:p:1123-1137
    DOI: 10.1007/s13132-014-0190-y
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    Cited by:

    1. Gritli, Mohamed Ilyes & Charfi, Fatma Marrakchi, 2023. "The determinants of oil consumption in Tunisia: Fresh evidence from NARDL approach and asymmetric causality test," Energy, Elsevier, vol. 284(C).
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    3. Anggi Putri Kurniadi & Hasdi Aimon & Syamsul Amar, 2021. "Determinants of Biofuels Production and Consumption, Green Economic Growth and Environmental Degradation in 6 Asia Pacific Countries: A Simultaneous Panel Model Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 460-471.
    4. Kassim, Fatima & Isik, Abdurrahman, 2020. "Impact of Energy Consumption on Industrial Growth in a Transition Economy: Evidence from Nigeria," MPRA Paper 101757, University Library of Munich, Germany.
    5. Solarin, Sakiru Adebola & Ozturk, Ilhan, 2016. "The relationship between natural gas consumption and economic growth in OPEC members," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1348-1356.
    6. Roubaud, David & Shahbaz, Muhammad, 2018. "Financial Development, Economic Growth, and Electricity Demand: A Sector Analysis of an Emerging Economy," MPRA Paper 87212, University Library of Munich, Germany, revised 06 Jun 2018.
    7. Mehdi Abid, 2016. "Energy Consumption-Informal Economic Growth Analysis: What Policy Options Do We Have?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 7(1), pages 207-218, March.
    8. Tiwari, Aviral Kumar & Eapen, Leena Mary & Nair, Sthanu R, 2021. "Electricity consumption and economic growth at the state and sectoral level in India: Evidence using heterogeneous panel data methods," Energy Economics, Elsevier, vol. 94(C).
    9. repec:bla:afrdev:v:29:y:2017:i:s2:p:78-95 is not listed on IDEAS
    10. Ogali, Oscar I.O. & Okoro, Emeka E. & Olafuyi, Saburi G., 2023. "Assessing consensus on nexus between natural gas consumption and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 187(C).

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    More about this item

    Keywords

    Co-integration; Industrial energy consumption-growth nexus; Tunisia; Vector error correction; C01; C32; Q43;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • 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
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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