۱٫ Introduction

۲٫ Literature Review

۳٫ Methodology

۴٫ Results and Discussions

۵٫ Conclusion

References

This article examines the causal relationship between the energy consumption, electricity consumption and GDP in Russia by using time series data from 1990-2011 implying the Toda and Yamamoto approach, which is revised form of the Granger (1969) causality test (Econ. 66 (1995) 225). The maximum order of integration was determined by using PP and ADF unit root tests. The Toda and Yamamoto test is applied regardless of whether the series are I(0), I(1), or I(2), mutually cointegrated or noncointegrated. The variables were estimated at level in the unrestricted lag-augmented VAR. The AIC, SC and LR lag criteria were used to determine the optimal lag length. The diagnostics tests were performed at the optimum lag selected by estimating the variables at level and confirmed the stability of the unrestricted VAR model. The empirical evidence showed that there exists a the bi-directional causality from electricity consumption to GDP that implies the validity of feedback hypothesis but no causality was found for GDP and energy consumption supporting the neutrality hypothesis. The estimated results confirmed that both the economic growth and electricity consumption empirically support each other and have a mutual and complementary relationship. But on another hand the energy sector of Russia has no impact on the economic growth for a period 1990-2011. Furthermore, if the Government of Russia devises policies to promote the access of energy and higher level of consumption, economic growth will not be affected.

Introduction

Energy consumption has been the burning issue around the world especially in the industrialized advanced nations. A huge literature can be found about the debate, on both energy consumption and GDP and the empirical results has been different for countries. The studies were conducted with the aim to know about the causality direction of energy consumption and GDP. Two views have inferred from the empirical studies conducted. One view is that as the economy expands that causes increase in demand for energy consumption. The second view that is an alternative view to the first argument claims that it is because of the energy consumption that the economy expands. While the third view is both the economic growth and energy consumption cause each other. i.e. bidirectional causality. Not only the causal relationship was studied, but also the long term relationship was analyzed between GDP and energy consumption. This is evident from the study conducted by Bowden and Payen, (2010), Lee (2006), Ozturk (2010); Apergis and Pyne, (2009a, 2011b;), Ewing et al.,2007, Soytas and Sari (2003), and Payne (2010) by setting four different hypothesis. The growth hypothesis in which the use of energy stimulates economic growth characterizes by causality direction from energy consumption to GDP. This causal relationship indicates that if the energy supplied to an economy is limited that may result in poor economic performance. In growth hypothesis the government should encourage the investment in more innovative approaches that should be aimed at improving the access to the energy at affordable rates for all productive sectors (Squalli, 2007).