The relationship between energy consumption and economic growth: Evidence from non-Granger causality test

摘要

This study examines the association between GDP and EC for Belgium using the sample period from 1960-2012. The study applied ARDL followed by a T-Y approach to identify the causality. The study validated the existence of long-run relationship between EC and GDP. Furthermore, GDP positively affects EC in long-run and short-run as well. The energy consumption congregates to the long-run by 17% convergence rate that confirms the system stability. The T-Y approach is used to investigate the direction of causality between EC and GDP. The findings confirmed a uni-directional relationship from GDP to EC proving the validity of conservation hypothesis in Belgium. The policies which are based on energy conservation, if implemented properly by the Government of Belgium, will have no adverse impact on economic growth.