Energy consumption and income in G-7 countries

Soytas U., Sari R.

JOURNAL OF POLICY MODELING, vol.28, no.7, pp.739-750, 2006 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 28 Issue: 7
  • Publication Date: 2006
  • Doi Number: 10.1016/j.jpolmod.2006.02.003
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.739-750
  • Keywords: energy consumption, economic growth, global warming, cointegration, vector error correction, generalized variance decompositions, MULTIVARIATE COINTEGRATION ANALYSIS, IMPULSE-RESPONSE ANALYSIS, EXPORT-LED GROWTH, UNIT-ROOT, REAL INCOME, TIME-SERIES, CAUSAL RELATIONSHIP, ERROR-CORRECTION, ECONOMIC-GROWTH, TEMPORAL CAUSALITY
  • Middle East Technical University Affiliated: No


Several industrialized countries have signed the Kyoto Protocol, promising to reduce greenhouse gasses (GHG) emissions. To reduce or mitigate such emissions several policies including reducing energy consumption, increasing energy efficiency, decreasing energy intensity and forestation may be possible. The viability and effectiveness of each policy may differ due to country specific factors. This paper tries to assess the impact of a change in energy consumption on income and vice versa in G-7 countries. We employ multivariate cointegration, error correction models and generalized variance decompositions and uncover Granger causality relation between energy consumption and income in all countries. However, the direction of causality seems to differ across countries. This may suggest that although they are at the same level of economic development, different policy alternatives in support of the protocol may be available in each country. (c) 2006 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.