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Relationship Between Energy Consumption and Economic Growth: Empirical Evidence for Singapore

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Relationship Between Energy Consumption and Economic Growth: Empirical Evidence for Singapore
UNIVERSITI MALAYSIA SABAH LABUAN INTERNATIONAL CAMPUS
Current Issues in International Financial Economics GD 30203
Semester 2, 2012/2013
Group Assignment Relationship between Energy Consumption and Economic Growth: Empirical Evidence for Singapore

Prepared for:

Mr. Ling Tai Hu
Prepared by: No. Name Matrix No. Course Sign

1. 2.

YAP YE LI BONG HEE CHUEN

BG10110560 BG10110038

HE 22 HE 22

15 MAY 2013

Date of Submission: th

Current Issues GD 30203

ABSTRACT
The objective of this study is to examine the relationship between energy consumptions and economic growth and address the policy implication on energy consumption in Singapore by using times series data from the period of 1980 to 2011. Johansen Co-integration model been used to analyze the data. The results show that energy consumptions are related to economic growth. The Granger Causality model been used to examine the causal effect of energy consumption in form of disaggregate and gross domestic product. The results show that coal consumption and gas consumption does not Granger cause to economic growth in Singapore, and vice versa. However, there are two unidirectional relationships found. First, causality runs from economic growth to oil consumption. Second, causality runs from electricity consumption to economic growth. Therefore, any policy will lead to a reduction in electricity used will negative impact to economic growth in Singapore.

1|P age

Current Issues GD 30203

Table of Contents
1.0 1.1 2.0 3.0 4.0 4.1 4.2 Introduction .......................................................................................................................... 3 Trend and Pattern of Energy in Singapore ....................................................................... 4 Literature Review................................................................................................................. 6 Theoretical Framework



References: Aqeel, A., & Butt, M. S. (2001). The relationship between energy consumption and economic growth in Pakistan. Asia-Pacific Development Journal, 8(2), 101-110. Asafu-Adjaye, J. (2000). The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries. Energy economics, 22(6), 615-625. Belke, A., Dobnik, F., & Dreger, C. (2011). Energy Consumption and Economic Growth: New Insights Into The Cointegration Relationship. Energy Economics, 33(5), 782–789. Binh, P. T. (2011). Energy consumption and economic growth in Vietnam: threshold cointegration and causality analysis. International Journal of Energy Economics and Policy, 1(1), 1-17. Cheng, B. S., & Lai, T. W. (1997). An investigation of co-integration and causality between energy consumption and economic activity in Taiwan. Energy Economics, 19(4), 435-444. EMA, (2012). Singapore Energy Statistics 2011. Energy Market Authority, Singapore. Retrieved May 2, 2013, from http://www.ema.gov.sg/media/files/publications/SES2011.pdf EMA, (2013). Singapore Energy Statistics 2012. Energy Market Authority, Singapore. Retrieved May 2, 2013, from http://www.ema.gov.sg/media/files/publications/EMA_SES_2012_Final.pdf Fatai, K., Oxley, L., & Scrimgeour, F. G. (2004). Modelling the causal relationship between energy consumption and GDP in New Zealand, Australia, India, Indonesia, The Philippines and Thailand. Mathematics and Computers in Simulation, 64(3), 431-445. Gbadebo, O. O., & Okonkwo, C. (2009). Does energy consumption contribute to economic performance? Empirical evidence from Nigeria. Journal of Economics and International Finance, 1(2), 044-058. Ghali, K. H., & El-Sakka, M. I. (2004). Energy use and output growth in Canada: a multivariate cointegration analysis. Energy Economics, 26(2), 225-238. 16 | P a g e Current Issues GD 30203 International Energy Statistic, (2013). U.S. Energy Information Administration. Retrieved April 28, 2013 from http://www.eia.gov/countries/country-data.cfm?fips=SN Kraft, J., & Kraft, A. (1978). On the relationship between energy and GNP. The Journal of Energy and Development, 3(2), pp.401-443. Kwakwa, P. A. (2012). Disaggregated energy consumption and economic growth in Ghana. International Journal of Energy Economics and Policy, 2(1), 34-40. Lise, W., & Van Montfort, K. (2007). Energy consumption and GDP in Turkey: Is there a co‐integration relationship?. Energy Economics, 29(6), 1166-1178. Magazzino, C. (2011). Energy consumption and aggregate income in Italy: cointegration and causality analysis. Shaari, M., Hussain, N., & Ismail, M. (2012). Relationship between Energy Consumption and Economic Growth: Empirical Evidence for Malaysia. Business Systems Review, 2(1), 17-28. Shahbaz, M., & Feridun, M. (2012). Electricity consumption and economic growth empirical evidence from Pakistan. Quality & Quantity, 46(5), 1583-1599. Tatlidil, H., Çemrek, F., & Şen, H. (nil). Cointegration Relationship among Electricity Consumption, GDP, and Electricity Price Variables in Turkey. Retrieved May 2, 2013, from http://www.iibf.selcuk.edu.tr/iibf_dergi/dosyalar/371348073380.pdf Wolde-Rufael, Y. (2004). Disaggregated industrial energy consumption and GDP: the case of Shanghai, 1952–1999. Energy Economics, 26(1), 69-75. World Bank Report (2013). Retrieved April 28, 2013 from data.worldbank.org Yang, H. Y. (2000). A note on the causal relationship between energy and GDP in Taiwan. Energy Economics, 22(3), 309-317. Yuan, J. H., Kang, J. G., Zhao, C. H., & Hu, Z. G. (2008). Energy consumption and economic growth: evidence from China at both aggregated and disaggregated levels. Energy Economics, 30(6), 3077-3094. 17 | P a g e Current Issues GD 30203 Appendices The CD-ROMs attached contains: • E-view results outcome names as Appendix, • written report in PDF, • Presentation slide, and • Reference journals. 18 | P a g e

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