The Dynamic Causal Links between Energy Consumption, Trade Openness and Economic Growth: Time Series Evidence from Upper Middle Income Countries
Authors: Murat Cetin, Eyyup Ecevit
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This study investigates the dynamic causal links between energy consumption, trade openness and economic growth for upper middle income countries over the period 1971-2014. The ARDL bounds test is used to examine the presence of cointegration between the variables. The VECM Granger causality method is also used to explore causality between the variables. Empirical results indicate that i) the variables are stationary at first differences, ii) there exists cointegration between the variables in Turkey, China, Colombia, Ecuador, Jamaica and Peru, iii) there exists important causal linkages among the variables in the long run, iv) the energy-led-growth and trade-led-growth hypotheses are demonstrated for Turkey, China, Colombia, Jamaica and Peru.