COINTEGRATION AND CAUSAL EFFECT ANALYSIS BETWEEN ENERGY CONSUMPTION OF SECTORS AND THEIR CONTRIBUTIONS TO GDP GROWTH

Date

2025-8-26

Author

Gurbannyyazov, Arslan

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

21
views

0
downloads

Cite This

There are plenty of studies conducted for the investigation of the long-run relationship between Energy Consumption and GDP growth of economies. Researchers applied cointegration and causality tests to aggregate Energy Consumption and aggregate GDP data of various countries at different time intervals. Some researchers have found a unidirectional causal effect between two variables, while others observed bi-directional causal effect. Almost all of them have observed the convergence. Since aggregate data constitute various sectors, previous studies analyzed the relationship between cumulative energy consumption of all sectors and cumulative product of the whole economy. However, structure of the economies evolve over time and contribution of each sector to the overall production changes. Analysis of the relationship between aggregate energy consumption and GDP data overlooks such factor along with many others like increase in energy efficiency. Gradual progress in technologies employed in each sector increased the productivity and reduced energy consumption. Therefore, in this study, the relationship between energy consumption in each sector of the economy and their corresponding contribution to GDP growth is investigated separately. Analysis shows that unlike in aggregate data results, sector-wise disaggregated data reveals divergence between variables though there is a cointegration and causal effect. This implies that conventional policy recommendations based on aggregate data cointegration and causal effect analysis are mis-guiding and there is a necessity for sector-wise tailored policies.

Subject Keywords

Cointegration, Sectoral Steady State, Causal Effect

URI

https://hdl.handle.net/11511/116099

Collections

Graduate School of Natural and Applied Sciences, Thesis