Energy Consumption and Growth in Romania: Evidence from a Panel Error Correction Model
This study examines the relationship between energy consumption and economic growth for the economy of Romania over the period 2000-2011 within a multivariate framework. A cointegration and error correction model is employed to infer the causal relationship. Cointegration test reveals a long-run equilibrium relationship between real GDP, energy consumption, the labor force, and real gross fixed capital formation with the respective coefficients positive and statistically significant. The Granger-causality results indicate both short-run and long-run causality from energy consumption to economic growth which supports the growth hypothesis.
Keywords: Energy consumption; Growth; Cointegration tests; Granger-causality
JEL Classifications: C23; Q43