The Asymmetric Impact of Energy consumption on economic growth; Empirical Evidence from the Jordanian Economy
DOI:
https://doi.org/10.35516/jjes.v10i2.1402Keywords:
Energy Consumption, Investment (Fixed Capital Formation), Labor Force, Economic Growth, NARDL ModelAbstract
Objectives: This study aims to demonstrate the asymmetric impact of energy consumption on Jordan's economic growth, addressing a range of explanatory variables of economic growth, mainly total energy consumption, total fixed capital formation, and total labor force from 1990 to 2019.
Methods: The study used the autoregressive lagging time lag model in its non-linear form (NARDL) for regression analysis. To achieve this purpose, the unit root test, the Wald-test asymmetry test, the Cointegration test, and a set of model validity tests were used.
Results: The results confirm that economic growth represented by growth in GDP is disproportionately affected by changes in energy consumption. Furthermore, the selected economic variables have had the expected impact in line with economic theory and previous literature.
Conclusions: The study recommended that economic shocks in the energy sector should be considered in the analysis of this relationship, whether positive or reverse in the long and short term, as they are important for decision-makers to limit the impact of such shocks on economic growth.
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