Revisiting the energy consumption-growth nexus for Croatia: New evidence from a multivariate framework analysis

This paper applies the most recently developed autoregressive distributed lag (ARDL) co-integration procedure to re-investigate co-integration and the causal relationship between energy consumption and real GDP within a multivariate framework that includes capital stock and labor input for Croatia d...

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Bibliographic Details
Published inContemporary Economics Vol. 8; no. 4; pp. 435 - 452
Main Authors Vlahinic, Nela, Jakovac, Pavle
Format Journal Article
LanguageEnglish
Published Warsaw Vizja Press & IT 01.12.2014
University of Finance and Management in Warsaw
University of Economics and Human Sciences in Warsaw
Subjects
ARDL
Capital stock
Causality
Croatia
Econometrics
Economic analysis
Economic growth
Economic history
Economic models
Economic policy
Economic statistics
Economic theory
Energy consumption
Energy efficiency
Energy policy
GDP
Gross Domestic Product
Literature reviews
Multivariate analysis
Production functions
Studies
Croatia
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Summary:This paper applies the most recently developed autoregressive distributed lag (ARDL) co-integration procedure to re-investigate co-integration and the causal relationship between energy consumption and real GDP within a multivariate framework that includes capital stock and labor input for Croatia during the 1952 - 2011 period. The empirical results fully support a positive long-run co-integrated relationship between production inputs and real GDP and the important role of energy in economic growth. It is found that a unidirectional causality runs from total final energy consumption to real GDP in the long run and that a bidirectional causality in the short run, which means that energy is a necessary requirement for economic growth. Additionally, the reduction in energy consumption could adversely affect GDP in the short and long run. Therefore, Croatia should adopt a more vigorous economic policy aimed toward increasing investments in installed energy capacities and reforming the economic structure towards re-industrialization and more energy-efficient industries.
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ISSN:2084-0845
2300-8814
DOI:10.5709/ce.1897-9254.155