Road energy consumption, economic growth, population and urbanization in Egypt: cointegration and causality analysis
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- Ibrahiem, D.M. Environ Dev Sustain (2017). doi:10.1007/s10668-017-9922-z
The study investigates the causal relationships between road energy consumption, economic growth, urbanization and population growth in Egypt over the period (1980–2011). I use Johansen cointegration approach, vector error correction model (VECM), generalized impulse response functions and variance decomposition technique. The results show the existence of long-run relationship between the variables. Moreover, the results indicate the existence of unidirectional long-run causality running from road energy consumption to urbanization and from road energy consumption to economic growth which implies the existence of growth hypothesis in the long run. Also, there is bidirectional short-run causality between road energy consumption and economic growth, which indicates the existence of feedback hypothesis in the short run. These results imply that road energy consumption determines economic growth in the both short run and long run and economic growth causes road energy consumption in the short run. And according to these results, several policy implications will be suggested for policymakers. They should take into consideration while implementing energy conservation policies, the possible negative effect on economic growth and have to concentrate on technological development policies and to make a shift towards using clean alternative fuel as natural gas and focus on investment in renewable energy resources.