Original scientific paper
EMPIRICAL ANALYSIS ON ECONOMIC GROWTH AND ENERGY CONSUMPTION RELATIONSHIP IN CROATIA
Pavle Jakovac
Abstract
This paper investigates the causal relationship between
economic growth and energy consumption in
Croatia for the period 1952-2010. Using Chow breakpoint
test we identified a structural break in the year
1989. Therefore, we have conducted our analysis on
two sub-samples. The first one refers to the period
1952-1989 while the second one refers to the period
1993-2010. The years between 1990 and 1992 have
been omitted from the analysis due to massive damage
to the Croatian economy caused by the war at
that time. Our findings suggest that there is a bidirectional
feedback in the short-run and that causality
runs from energy consumption to economic growth
in the long-run in the first sub-sample. At that time,
especially in mid 1970s, Croatia became a medium
developed industrial country with the industry sector
as the biggest consumer of energy so energy consumption
played an important role in the growth
process. After the structural break, we found a unidirectional
causality running from economic growth
to energy consumption. In this case, energy conservation
policies together with the establishment of a
competitive energy market may be feasible with little
or no detrimental side effects to economic growth
and employment.
Keywords
Economic growth; Energy consumption; Croatia; Chow breakpoint test; Granger causality
Hrčak ID:
113960
URI
Publication date:
1.12.2013.
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