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ENERGY CONSUMPTION AND GDP REVISITED: A FRACTIONAL COINTEGRATION RELATIONSHIP FOR TURKEY

Burcu Kıran

Abstract


This paper investigates the relationship between energy consumption and GDP for Turkey over the period from 1960 through 2009 by using a fractional cointegration approach, which allows residuals to be fractionally integrated rather than stationary, with the classical cointegration approach based on I(0) stationarity or I(1) cointegrating relationships. The findings obtained from the Engle and Granger cointegration test indicate that there is no evidence of cointegration between energy consumption and GDP. On the other hand, the results of the fractional cointegration test give evidence of fractional cointegration which implies that deviations from the long run relationship shared by energy consumption and GDP take a long time to dissipate before reaching their equilibrium level.


Keywords


Energy consumption; GDP; Fractional co-integration;

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DOI: http://dx.doi.org/10.15173/esr.v19i1.537