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Energy consumption and GDP in Italy: cointegration and causality analysis

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Abstract

The aim of this article was to assess the empirical evidence of the nexus between GDP and energy consumption for Italy during the period 1970–2009, using a time series approach. After a brief introduction, a survey of the economic literature on this issue is shown, before discussing the data and introducing some econometric techniques. Stationarity tests reveal that both series are nonstationary, or I(1). Moreover, a cointegration relationship is found between the two variables. The short-run dynamics of the variables show that the flow of causality runs from energy use to GDP, and there is a long-run bidirectional causal relationship (or feedback effect) between the two series. Consequently, we conclude that energy is a limiting factor to GDP growth in Italy and that energy conservation policy should be formulated and implemented wisely.

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Notes

  1. For detailed analyses of the time series modelling used see, among others: Lütkepohl (2005), Enders (2003), Dagum (2002), Franses (2002), Hamilton (1994).

  2. See, for more details: http://www.ggdc.net/databases/ted.htm and http://www.iea.org/.

  3. For more details, see Ranci (2011).

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  1. Department of Political Sciences, Roma Tre University, Via G. Chiabrera 199, 00145, Rome, Italy

    Cosimo Magazzino

  2. Italian Economic Association (SIE), Ancona, Italy

    Cosimo Magazzino

  3. Royal Economic Society (RES), London, UK

    Cosimo Magazzino

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Magazzino, C. Energy consumption and GDP in Italy: cointegration and causality analysis. Environ Dev Sustain 17, 137–153 (2015). https://doi.org/10.1007/s10668-014-9543-8

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