Energy consumption and GDP causality: A three-step analysis for emerging European countries

The established European targets should play a leading role in the complex economic process of energy consumption, and the emerging countries have to consider their implications for adjusting the energy policies at national level. This paper develops investigations on the causality relationship between energy consumption and GDP in the context of emerging European countries covering the period 1980-2013. This research covers the limits identified by previous researchers, by detailing the energy consumption by sources and by referring to five emerging countries in Europe. Unlike most of the previous studies it has a double approach: long and short-run bidirectional relationships. A detailed analysis on the impact of economic growth on the energy consumption by country is conducted in order to contribute to the enrichment of the research field. Towards this objective, a three-step analysis is performed: stationarity, cointegration and causality tests are considered. The empirical study shows mixed results. There is a balance in confirming conservation, growth and neutrality hypotheses. In some specific cases results imply that energy consumption and economic growth are jointly determined. However, a comparative analysis for different significance levels draws attention on the differences in judgment of results for this type of studies. Discussions on the results in terms of causality are conducted in order to identify future trends for research.