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Muhammad Shahbaz, Aviral Kumar Tiwari and Saleheen Khan
''Is energy consumption per capita stationary? Evidence from first and second generation panel unit root tests ''
( 2016, Vol. 36 No.3 )
The empirical investigation of unit root properties of energy variables is very important to test the energy-growth nexus. Testing unit root properties of energy consumptions helps policy makers to design adequate energy policies once they are aware of whether energy use is temporary or permanent. In this purpose, we have applied both first- and second-generation panel unit root tests on energy consumptions per capita in 103 countries with high-, middle- and low-income classification from 1971 to 2011. Our results indicate that energy consumptions per capita follow a stationary process in high- and middle-income countries, while it follows a unit root process in low-income countries. This suggests that short-run energy policies should be drawn to sustain economic growth and fulfill energy demands in high- and middle-income countries. However, in low-income countries, policy makers should draw long-term energy policies.
Keywords: Energy Consumption, Panel Unit Root Tests
JEL: C5 - Econometric Modeling: General
Q4 - Energy: General
Manuscript Received : Jun 03 2015 Manuscript Accepted : Aug 24 2016

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