Theoretical and Applied Economics
No. 3 / 2020 (624), Autumn
The causal relationship between Indian energy consumption and the GDP: A shift from conservation to feedback hypothesis post economic liberalisation
National Mission on Himalayan Studies and Kumaun University, Uttarakhand, India
Rajnish PANDE
Kumaun University, Uttarakhand, India
Subrat SHARMA
Centre for Environmental Assessment and Climate Change, Uttarakhand, India
Abstract. Fossil fuels are the main source of energy generation, which on one hand induces development and on the other hand increases emissions. This creates a dissonance between energy consumption and economic growth. In the recent years, liberalisation and policy transformations took place in India rapidly particularly after the 1990s. Therefore we developed relationship between per capita energy consumption and economic growth (Gross Domestic Product as an indicator) for this era (1991-2014). Toda-Yamamoto causality test framework of vector autoregressive model was used to test the relationship between the two. In contrast to earlier studies, our results present a bidirectional causality which shows that economic growth demands energy vis-a-vis energy consumption induces economic growth. Harmonized implications of these results are crucial input to policy purposes for inclusive development.
Keywords: energy consumption, economic growth, Toda-Yamamoto causality test, VAR model.
Contents
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