Commenced in January 2007
Paper Count: 31821
Evaluating the Nexus between Energy Demand and Economic Growth Using the VECM Approach: Case Study of Nigeria, China, and the United States
Abstract:The effectiveness of energy demand policy depends on identifying the key drivers of energy demand both in the short-run and the long-run. This paper examines the influence of regional differences on the link between energy demand and other explanatory variables for Nigeria, China and USA using the Vector Error Correction Model (VECM) approach. This study employed annual time series data on energy consumption (ED), real gross domestic product (GDP) per capita (RGDP), real energy prices (P) and urbanization (N) for a thirty-six-year sample period. The utilized time-series data are sourced from World Bank’s World Development Indicators (WDI, 2016) and US Energy Information Administration (EIA). Results from the study, shows that all the independent variables (income, urbanization, and price) substantially affect the long-run energy consumption in Nigeria, USA and China, whereas, income has no significant effect on short-run energy demand in USA and Nigeria. In addition, the long-run effect of urbanization is relatively stronger in China. Urbanization is a key factor in energy demand, it therefore recommended that more attention should be given to the development of rural communities to reduce the inflow of migrants into urban communities which causes the increase in energy demand and energy excesses should be penalized while energy management should be incentivized.
Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1131820Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 788
 US Energy Information and Administration, International Energy Outlook 2016. Release date May 11, 2016. DOE/EIA-0484(2016).
 IHS/CERA 2012. The role of Energy sector in job creation. Energy for Economic Growth; Energy vision update report 2012. 16-17, 205pages.
 Hutzler, M. Doman, L. Anderson, A.T. 1998. International Energy Outlook 98: with projections through 2020. Diane Publishing, 205pages.
 Ogaji, C.A. 2011. Importance of Energy to the Nigerian Economy. Retrieved from www.wordpress.com. On March 21, 2017.
 Eden, R. J. 1981. Energy Economics; Growth, Resources and Policies. CUP Archive. Retrieved from google books on March 23, 2017.
 Shepard, W. 2016. China’s Growth in Energy Demand Drops to 17-year low. Asia Economy. Uploaded on july 9, 2016 @ 4.00am and accessed on March 20, 2017.
 Crompton, P. and Yanrui, W. (2004). Energy consumption in China: Past trends and future directions.
 Shenggen, F, Zhang, X. and Sherman, R. 2003. Structural change and Economic Growth in China. Review of Development Economics, vol. 7, 360-377. Retrieved from SSRN: http://ssrn.com/abstract=428155
 Dantama, Y.U. and Ihuowa, N. 2012. The relationship between energy consumption and Economic growth in Nigeria. Journal of research in Development. Vol. 10(3).
 Gbadebo, O.O. and Okonkwo, C. 2009. Does Energy contribute to Economic Performance? Empirical evidence from Nigeria. Journal of Economic and international finance. Vol .1(2), 044-058.
 Ang, B. and Lui, N. 2001. A new energy decomposition method: perfect in decomposition and consistent in aggregation. Energy, (26):537- 548
 Xiaojie, X. 2016. CASS Innovation Program World Energy China Outlook: 2015 – 2016 interim report. Retrieved from www.ief.org/_resources/files/snippets/chinese-academy-of-social-sciences-cass/world-energy-china-outlook-interim-report.pdf.
 Johansen, S., 1991. Estimation and hypothesis testing of cointegration vectors in gaussian vector autoregressive models. Econometrica 59, 1551–1580.
 Johansen, S., 1988. Statistical analysis of cointegrating vectors. Journal of Economic Dynamics and Control 12, 231–254.
 Karimu, A. and Brännlund, R., 2013. Functional form and aggregate energy demand elasticities: anonparametric panel approach for 17 OECD countries. Energy Economics 36, 19-27.