Energy Consumption and Economic Growth in Malaysia: A Case of Oil and Natural Gas

Herniza Roxanne Marcus

Abstract


This study is set out to examine the relationship between energy consumption and economic growth in Malaysia by using time series data from 1980 to 2011. The energy consumption will be disaggregated to gas, and oil. The analysis of the data started with the unit root test to test for the stationarity of data, then applying cointegration test to test for the long run relationship between the variables and lastly, causality test to indicate the direction of causality between aggregate energy consumption and disaggregate energy consumption with economic growth. Moreover, the element of structural break is also included in this study to investigate the impact of structural break to the result. Findings show that even in the presence of structural break, the cointegration still exists between the variables. The results show that economic growth and aggregate energy consumption possess a bidirectional causality between each other. For disaggregate analysis, findings exposed a unidirectional causality from gas to GDP.


Keywords


Aggregate; disaggregate; cointegration; structural break; Toda Yamamoto

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