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The causal relationship between natural gas consumption and economic growth: Evidence from the G7 countries

Author

Listed:
  • Tsangyao Chang

    (Department of Finance, Feng Chia University, Taichung, Taiwan)

  • Rangan Gupta

    (Department of Economics, University of Pretoria)

  • Roula Inglesi-Lotz

    (Department of Economics, University of Pretoria)

  • Lilian S. Masabala

    (Department of Economics, University of Pretoria)

  • Beatrice D. Simo-Kengne

    (Department of Economics, University of Pretoria)

  • Jaco P. Weideman

    (Department of Economics, University of Pretoria)

Abstract

This paper re-examines the nature of the causality between natural gas consumption and economic growth in G-7 countries using a Granger causality procedure based on meta-analysis in heterogeneous mixed panels which takes into account cross-sectional dependence and heterogeneity across countries. Empirical results from annual data covering the period from 1965 to 2011, indicate no causal relationship in any direction between economic growth and natural gas consumption; implying that these two variables are not sensitive to each other. This finding is in line with individual country results, except the United Kingdom, which provides support for a unidirectional causality running from GDP to natural gas consumption. Therefore, energy policy geared towards a reduction in natural gas consumption may not significantly affect the economic growth.

Suggested Citation

  • Tsangyao Chang & Rangan Gupta & Roula Inglesi-Lotz & Lilian S. Masabala & Beatrice D. Simo-Kengne & Jaco P. Weideman, 2013. "The causal relationship between natural gas consumption and economic growth: Evidence from the G7 countries," Working Papers 201370, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201370
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    Cited by:

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    2. Sudeshna Ghosh, 2019. "Environmental Pollution, Income Inequality, and Household Energy Consumption: Evidence from the United Kingdom," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(02), pages 1-31, June.
    3. Erdoğan, Seyfettin & Gedikli, Ayfer & Kırca, Mustafa, 2019. "A note on time-varying causality between natural gas consumption and economic growth in Turkey," Resources Policy, Elsevier, vol. 64(C).
    4. Ur Rahman, Zia & Iqbal Khattak, Shoukat & Ahmad, Manzoor & Khan, Anwar, 2020. "A disaggregated-level analysis of the relationship among energy production, energy consumption and economic growth: Evidence from China," Energy, Elsevier, vol. 194(C).
    5. Harkat, Tahar, 2019. "The Impact of Natural Gas Consumption on Industry Value Added in the Mediterranean Region," MPRA Paper 92492, University Library of Munich, Germany.
    6. Fadiran, Gideon & Adebusuyi, Adebisi T. & Fadiran, David, 2019. "Natural gas consumption and economic growth: Evidence from selected natural gas vehicle markets in Europe," Energy, Elsevier, vol. 169(C), pages 467-477.
    7. Victoria Oluwatoyin Foye & Oluwasegun Olawale Benjamin, 2021. "Natural gas consumption and economic performance in selected sub‐Saharan African countries: A heterogeneous panel ARDL analysis," African Development Review, African Development Bank, vol. 33(3), pages 518-532, September.
    8. 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

    Gas Consumption; Economic Growth; Dependency and Heterogeneity; Panel Causality;
    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
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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