Energy consumption and economic growth in the light of meeting the targets of energy policy in the EU: The bootstrap panel Granger causality approach

The aim of the paper is to assess linkages between energy consumption and economic growth in the light of compliance with the EU energy policy targets stated in the climate and energy package for 2020 in the European Union member states in the period 1993-2011. The study is divided into two main stages. During the first one, using cluster analysis methods, four groups of countries which met three energy policy targets stated in the package at similar levels were identified. During the second stage, the bootstrap Granger panel causality approach proposed by Kònya (2006) was used to verify the hypothesis of causality between energy consumption and economic growth in the countries from four groups created in the previous step. The global financial crisis was also taken into account. The results obtained reveal that the level of compliance with energy policy targets influences linkages between energy consumption and economic growth. The results indicate causal relations in the group of countries with the greatest reduction of greenhouse gas emissions, the highest reduction of energy intensity and the highest share of renewable energy consumption in total energy consumption. In the remaining groups the results mostly confirm the neutrality hypothesis.