Causality Between Energy Consumption and Output Growth in Indian Cement Industry: An Application of the Panel Vector Error Correction Model

Mandal, Sabuj Kumar and Madheswaran, S (2010) Causality Between Energy Consumption and Output Growth in Indian Cement Industry: An Application of the Panel Vector Error Correction Model. Energy Policy, 38 (11). pp. 6560-6565.

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Abstract

he aim of this paper is to examine the existence and direction of the causal relationship between energy consumption and output growth in the Indian cement industry for the period 1979–80 to 2004–05. The most recently developed panel unit root, a heterogeneous panel cointegration and panel-based error correction model, is applied within a multivariate framework. The empirical results confirm a positive, long-run cointegrated relationship between output and energy consumption when heterogeneous state effects are taken into account. We also found a long-run, bi-directional relationship between energy consumption and output growth in the Indian cement industry for the study period, implying that an increase in energy consumption directly affects the growth of this sector and that growth stimulates further energy consumption. These empirical findings imply that energy consumption and output are jointly determined and affect each other. The empirical evidence also suggests the implementation of energy conservation policies oriented toward improving energy-use efficiency to avoid any negative impacts of the conservation policies on the growth of this industry.

Item Type:	Article
Uncontrolled Keywords:	Energy-output causality;Indian cement industry;Panel error correction model
Subjects:	Entrepreneurship_Industry Entrepreneurship_Industry > Industry
Divisions:	General Management and Enterpreneurship
Depositing User:	Mr. Ramesh Kamath
Date Deposited:	17 Nov 2018 12:26
Last Modified:	17 Nov 2018 12:26
URI:	http://tapmi.informaticsglobal.com/id/eprint/408

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