Coal Consumption and economic growth: Panel cointegration and causality evidence from OECD and Non-OECD countries

Taeyoung Jin, Jinsoo Kim

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This paper examines the relationship between coal consumption and economic growth for 30 OECD (Organisation for Economic Co-operation and Development) countries and 32 non-OECD countries for 1990-2013 using a multivariate dependent panel analysis. For the analysis, we conducted the common factor defactorization process, unit root test, cointegration test, long-run cointegrating vector, and Granger causality test. Our results suggest the following: First, there is no long-run relationship between coal consumption and economic growth in OECD countries; however, in non-OECD countries, the relationship does exist. Second, excessive coal usage may hinder economic growth in the long run. Lastly, the growth hypothesis (coal consumption affects economic growth positively) is supported in the short run for non-OECD countries. As coal consumption has a positive effect on economic growth in the short run and a negative effect in the long run, energy conservation policies may have adverse effects only in the short run. Thus, non-OECD countries should gradually switch their energy mix to become less coal-dependent as they consider climate change. Moreover, a transfer of technology and financial resources from developed to developing countries must be encouraged at a global level.

Original languageEnglish
Article number660
JournalSustainability (Switzerland)
Volume10
Issue number3
DOIs
StatePublished - 2018 Mar 1

Fingerprint

OECD
causality
coal
economic growth
economic cooperation
Coal
Economics
economics
evidence
Granger causality test
energy
energy conservation
co-operation
consumption
climate change
conservation
developing world
developing country
Developing countries
Climate change

Keywords

  • Coal consumption
  • Dependent panel
  • Economic growth
  • Nexus
  • Panel analysis

Cite this

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abstract = "This paper examines the relationship between coal consumption and economic growth for 30 OECD (Organisation for Economic Co-operation and Development) countries and 32 non-OECD countries for 1990-2013 using a multivariate dependent panel analysis. For the analysis, we conducted the common factor defactorization process, unit root test, cointegration test, long-run cointegrating vector, and Granger causality test. Our results suggest the following: First, there is no long-run relationship between coal consumption and economic growth in OECD countries; however, in non-OECD countries, the relationship does exist. Second, excessive coal usage may hinder economic growth in the long run. Lastly, the growth hypothesis (coal consumption affects economic growth positively) is supported in the short run for non-OECD countries. As coal consumption has a positive effect on economic growth in the short run and a negative effect in the long run, energy conservation policies may have adverse effects only in the short run. Thus, non-OECD countries should gradually switch their energy mix to become less coal-dependent as they consider climate change. Moreover, a transfer of technology and financial resources from developed to developing countries must be encouraged at a global level.",
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Coal Consumption and economic growth : Panel cointegration and causality evidence from OECD and Non-OECD countries. / Jin, Taeyoung; Kim, Jinsoo.

In: Sustainability (Switzerland), Vol. 10, No. 3, 660, 01.03.2018.

Research output: Contribution to journalArticle

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AB - This paper examines the relationship between coal consumption and economic growth for 30 OECD (Organisation for Economic Co-operation and Development) countries and 32 non-OECD countries for 1990-2013 using a multivariate dependent panel analysis. For the analysis, we conducted the common factor defactorization process, unit root test, cointegration test, long-run cointegrating vector, and Granger causality test. Our results suggest the following: First, there is no long-run relationship between coal consumption and economic growth in OECD countries; however, in non-OECD countries, the relationship does exist. Second, excessive coal usage may hinder economic growth in the long run. Lastly, the growth hypothesis (coal consumption affects economic growth positively) is supported in the short run for non-OECD countries. As coal consumption has a positive effect on economic growth in the short run and a negative effect in the long run, energy conservation policies may have adverse effects only in the short run. Thus, non-OECD countries should gradually switch their energy mix to become less coal-dependent as they consider climate change. Moreover, a transfer of technology and financial resources from developed to developing countries must be encouraged at a global level.

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