Article

Do gross domestic product changes have asymmetric effects on India’s energy use? New empirical evidence from non-linear autoregressive distributed lag model

  • 2017 | Volume: 1 | Issue: 1 | Page: 1-8





Abstract

The existing literature on the linkage between Gross Domestic Product (GDP) and energy use in both industrialized and developing economies usually assumes that the impacts of gross domestic product changes are symmetric. In this study, we utilized nonlinear autoregressive distributed lag (NARDL) model and test whether or not the effect of variations in the gross domestic product on energy use is symmetric or asymmetric from the context of India. Using time series data over 1971-2014, the findings depict that the change in the gross domestic product has a symmetric effect on energy use both in short-run and the long-run. Our conclusions infer that there is no asymmetrical association between GDP and energy use, leading to support the symmetric impact of GDP on energy use.

Keywords and JEL Classification

Keywords

GDP, Energy use, NARDL, India, Asymmetric effects

JEL Classification

E10; N75; O13; Q43

1. Introduction

2. Research Methods

3. Empirical Results & Discussion

4. Conclusion

   Changes in the Gross Domestic Product are expected to have asymmetric effects on energy use. However, the previous literature on the nexus between GDP and energy used not directly test the asymmetry hypothesis in their works of research. Thus, the current study is conducted to test whether or not the effect of changes in the gross domestic product on energy use is asymmetric from the perspective of India, currently one of the top emerging economies among developing countries and third largest end user of energy in all over the world. The findings of nonlinear ARDL validate that variations in GDP have an asymmetric effect on energy use in both short-run and the long-run. In other words, the asymmetry of changes in GDP is not observed in both short-run and long-run.

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