Nuclear and Non-nuclear Energy Consumption and Economic Growth in Taiwan

Abstract

This study investigates the linear and nonlinear causality among nuclear energy consumption (NEC), non-nuclear energy consumption (N-NEC), and real gross domestic product (RGDP) for Taiwan data from 1980–2010. The Hiemstra and Jones (1994) test for nonlinear causality reveals the absence of linear Granger causality among NEC, N-NEC and RGDP which supports the unidirectional causality from NEC (RGDP) to RGDP (N-NEC). This result provides empirical evidence for the energy policy formulators to encourage NEC and limit N-NEC to achieve economic growth.

Keywords:

• causality
• economic growth
• non-nuclear energy consumption
• nuclear energy consumption

Notes

¹ The average Taiwan generation cost was 7.0 c/kWh in 2008, with coal-fired generation at US$5.8 cents/kWh, and liquefied natural gas at US$11.25 cents/kWh. During their first ten years of operation, the Lungmen reactors (one of the reactors under construction) are expected to generate at US$3.8 cents/kWh (World Nuclear Association, 2010).

² Most economists use GDP to measure and represent economic growth (Bodie et al., 2001).

³ The non-nuclear energy source represents energy consumption related to coal products, crude oil, natural gas, conventional hydropower, solar thermal, and wind power.

⁴ Baek and Brock (1992) conducted a nonlinear Granger causality test to solve the nonlinearity problem. They applied Monte Carlo simulation and proved that the forecasting performance of nonlinear models is better than the linear model.