Relationship between energy consumption and economic growth in South Africa: Evidence from the bootstrap rolling-window approach

Janneke Dlamini, Mehmet Balcilar, Rangan Gupta, Roula Inglesi-Lotz
2016 Energy Sources Part B Economics Planning and Policy  
This article examines the relationship between energy consumption (EC) and economic growth for South Africa for the period 1971-2009. Most studies examining this relationship do assume that it remains constant through the years; however, the reality might be different since many factors can affect the existence and direction of this causality. This article looks at a bivariate vector autoregressive process and takes into consideration any instability in the model using bootstrap rolling Granger
more » ... non-causality tests. Full-sample Granger causality tests report no causal relationship between the two variables. Moreover, parameter stability tests detect instability in the model which means that the full-sample Granger causality results are not valid. We therefore allow for the possibility of structural breaks by using bootstrap rolling-window Granger causality tests. Although our results are not very strong, we do however find a sub-period from 1987 to 1989 where EC has a causal effect on gross domestic product growth. Except for this brief sub-period, the results show no linkage between economic growth and EC.
doi:10.1080/15567249.2013.843618 fatcat:vzxokjegx5gqfkjk6w7ssop7u4