SGRE  Vol.5 No.8 , August 2014
Causality Relationship between Energy Consumption and Economic Growth in Brazil
ABSTRACT

This study has investigated the relationship between energy consumption and economic growth in Brazil during the period of 1980-2008. The co-integration test indicates a long-run equilibrium relationship between variables, andenergy consumption appears to be real GDP elastic. This elasticity suggests that energy consumption has a great positive influence on changes in income. The causality results from the error correction model reveal a unidirectional short-run causality from energy consumption to economic growth and a bidirectional strong causality between them. These findings suggest that Brazil should adopt a dual strategy of increasing investment in energy infrastructure, and stepping up energy conservation policies to reduce any unnecessary waste of energy, in order to avoid having a negative effect on economic growth by reducing energy consumption. In contrast, energy conservation is expected to increase the efficient use of energy and, therefore, enhance economic growth.


Cite this paper
Pao, H. , Li, Y. and Fu, H. (2014) Causality Relationship between Energy Consumption and Economic Growth in Brazil. Smart Grid and Renewable Energy, 5, 198-205. doi: 10.4236/sgre.2014.58019.
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