THE RELATIONSHIP BETWEEN ELECTRICITY ENERGY CONSUMPTION AND INCOME: EVIDENCE FROM ARDL BOUNDS TESTING FOR KYRGYZ REPUBLIC

Yıl 2015, Cilt: 3 Sayı: 2, 109 - 122, 10.01.2016

Muhsin Halis Levent Korap

Öz

The potential links between energy consumption and real income have a critical role in designing discretionary macroeconomic policies for stabilization purposes. In this paper, we try to examine such a relationship for Kyrgyz Republic, and utilize some contemporaneous time series estimation techniques to obtain policy-based conclusions. In light of a methodological discussion, the results indicate that there exists a long run relationship if the real income is chosen as the dependent variable. We found that the larger the electricity consumption the larger would be the real income. Also, the causality analyses carried out in a Granger sense do not support the so-called neutrality hypothesis which means no causal relations between the variables. Instead, we give evidence supporting a one-way causality running from changes in electricity consumption to changes in real income. All in all, the paper emphasizes that policies in favor of energy conservation can lead to harm the economic growth in Kyrgyz Republic.

Anahtar Kelimeler

Energy Consumption, Real Income, ARDL Bounds Testing, Causality, Kyrgyz Republic

Kaynakça

• Akarca, A.T. and Long, T.V. (1980). “On the Relationship between Energy and GNP: A Reexamination”, Journal of Energy and Development, 5, 326-331.
• Al-Iriani, M. (2006). “Energy-GDP Relationship Revisited: An Example form GCC Countries Using Panel Causality”, Energy Policy, 34, 3342-3350.
• Asafu-Adjaye, J. (2000). “The Relationship between Energy Consumption, Energy Prices and Economic Growth: Time Series Evidence from Asian Developing Countries”, Energy Economics, 22, 615-625.
• Erol, U. and Yu, E.S.H. (1987). “On the Causal Relationship between Energy and Income for Industrialized Countries”, Journal of Energy and Development, 13, 113-122.
• Ghali, K.H. and El-Sakka, M.I.T. (2004). “Energy Use and Output Growth in Canada: A Multivariate Cointegration Analysis”, Energy Economics, 26, 225-238.
• Glasure, Yong U. and Lee, Aie-Rie (1997). “Cointegration, Error-correction, and the Relationship between GDP and Energy: The Case of South Korea and Singapore”, Resource and Energy Economics, 20, 17-25.
• Granger, C.W.J. (1969). “Investigating Causal Relations by Econometric Modelsand Cross Spectral Methods”, Econometrica, 37, 424-438.
• Halis, M. and Korap, L. (2014). Effects of Electricity Revenues on Socio-Economic Development in Kyrgyzstan, Paper presented at the International Congress on Economics, Finance and Energy (EFE’2014), Hoca Ahmet Yesevi International Turkish-Kazakh University, June 12-14, 2014, Almaty / KAZAKHSTAN.
• Hondroyiannis, G., Lolos, S. and Papapetrou, E. (2002). “Energy Consumption and Economic Growth: Assessing the Evidence form Greece”, Energy Economics, 24, 319-336.
• http://www.imf.org/external/pubs/ft/weo/2014/02/weodata/weoselser.aspx?c=917&t=1
• Hwang, D.B.K. and Gum, B. (1992). “The Causal Relationship between Energy and GNP: The Case of Taiwan”, Journal of Energy and Development, 16, 219-226.
• Jumbe, C.B.L. (2004). “Electricity Consumption and GDP: Empirical Evidence from Malawi”, Energy Economics, 26, 61-68.
• Kraft, J. and Kraft, A. (1978). “On the Relationship between Energy and GNP”, Journal of Energy and Development, 3, 401-403.
• Lee, C.-C. (2005). “Energy Consumption and GDP in Developing Countries: A Cointegrated Panel Analysis”, Energy Economics, 27, 415-427.
• Masih, A.M.M. and Masih, R. (1996). “Energy Consumption, Real Income and Temporal Causality: Results from a Multi-country Study Based on Cointegration and Error-correction Modelling Techniques”, Energy Economics, 18, 165-183.
• Masih, A.M.M. and Masih, R. (1997). “On the Temporal Causal Relationship between Enegy Consumption, Real Income and Prices: Some New Evidence from Asian-Energy Dependent NICs Bsed on a Multivariate Cointegration / Vector Error Correction Approach”, Journal of Policy Modeling, 19/4, 417-440.
• Masih, A.M.M. and Masih, R. (1998). “A Multivariate Cointegrated Modelling Approach in Testing Temporal Causality between Energy Consumption, Real Income and Prices with an Application to Two Asian LDCs”, Applied Economics, 30, 1287-1298.
• Mehrara, M. (2007). “Energy Consumption and Economic Growth: The Case of Oil Exporting Countries”, Energy Policy, 35, 2939-2945.
• National Statistical Office of Kyrgyz Republic. Statistical Bulletins, Various Issues.
• Ng, Serena and Perron, P. (2001). “Lag Length Selection and the Construction of Unit Root Tests with Good Size and Power”, Econometrica, 69/6: 1519-1554.
• Oh, W. and Lee, K. (2004). “Energy Consumption and Economic Growthin Korea: Testing the Causality Relation”, Journal of Policy Modeling, 26, 973-981.
• Pesaran, M.H., and Shin, Y. 1999. An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis. Chapter 11 in Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium, Strom S.(ed.), Cambridge: Cambridge University Press.
• Pesaran, M.H, Shin, Y. and Smith, R.J. 2001. Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16, 289-326.
• Sims, C. (1972). “Money, Income and Causality”, American Economic Review, 62, 540-552.
• Soytas, U. and Sarı, R. (2003). “Energy Consumption and GDP: Causality Relationship in G-7 Countries and Emerging Markets”, Energy Economics, 25, 33-47.
• Yu, E.S.H. and Jin, B.K. (1984). “The Relationship between Energy and GNP: Further Results”, Energy Economics, 6, 168-190.
• Yu, E.S.H. and Choi, J.Y. (1985). “The Causal Relationship between Energy and GNP: An International Comparison”, Journal of Energy and Development, 10, 249-272.
• Yu, E.S.H and Jin, J.C. (1992). “Cointegration Tests of Energy Consumption, Income and Employment”, Resources and Energy, 14, 259-266.