ABSTRACT
This study examines the four commonly tested hypotheses in hydroelectricity consumption – economic growth literature for 12 Asian countries. Our results from a recently developed hidden cointegration technique uncover rich and significant relationships between negative and positive components of the variables under consideration. In particular, we find evidence to support the neutrality hypothesis in five countries (Bangladesh, Indonesia, Pakistan, Philippines, and Thailand), the growth hypothesis in four countries (India, Japan, South Korea and Taiwan), and both growth and conservation hypotheses in three countries (China, Malaysia, and New Zealand). These findings suggest that appropriate economic policies should be elaborated on the basis of the country’s specific hydroelectricity consumption–growth nexus. Finally, our new evidence suggests that the lack of stable relationship between hydroelectricity consumption and economic growth documented in previous studies for some of these countries could be due to the failure to properly account for the nonlinearity property in the data.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 In 2012, investments amounted to US$ 244.4 bn compared to US$ 279 bn in 2011. Solar power was the main target sector of these new investments (US$ 140.4 bn, an 11% drop), ahead of wind power (US$ 80.3 bn, a 10% drop), biomass and waste (US$ 8.6 bn, a 34% drop), biofuels (US$ 5 bn, a 40% drop) and geothermal power (US$ 2.1 bn, a 44% drop).
3 See Granger and Yoon (Citation2002) and Schorderet (Citation2004) for more technical details.
4 We also estimate and test the long-run relationships for components of HC and real GDP by combining the Granger and Yoon (Citation2002) and other unit root tests (PP and MZ), but the results remain intact. They can be made entirely available upon request to the author.