Dynamic co-movements between energy consumption and economic growth. A panel data and wavelet perspective

In this study, a wavelet analysis with panel data is performed to conclude about the causality relationship between the GDP and energy consumption of 74 countries of the world, for the years 1972 to 2014. We add a frequency-domain perspective to conclude about the effects at different time periods, while the panel data analysis allows us to study different heterogeneities that may occur due to geography, GDP per capita, and human development classification. For all of the sample, there is bi-causality between electrical energy consumption and GDP in the long run, while for the short and medium run, causality is verified from GDP to electricity consumption. When segmented by continents, the results are mixed; however, when the division is done by HDI, there is bi-causality between electricity consumption and GDP for high HDI countries. In contrast, for countries with a low HDI, there is causality from electricity consumption to GDP. This poses a set of particularly important policy implications for countries with low human development.