JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Energy-Output Linkages in Australia: Implications for Emissions
Reduction Policies
Author(s): Md. Shahiduzzaman, Khorshed Alam
Citation: Md. Shahiduzzaman, Khorshed Alam, (2011) "Energy-Output Linkages in Australia: Implications for Emissions Reduction Policies," Journal of Applied Business and Economics, Vol. 12, Iss. 3, pp. 48 - 60
Article Type: Research paper
Publisher: North American Business Press
Abstract:
The study investigates the long-run and dynamic relationships between energy consumption and
output in Australia using a multivariate cointegration and causality framework. Using both
Engle-Granger and Johansen cointegration approaches, the study finds that energy consumption
and real Gross Domestic Product are cointegrated. The Granger causality tests suggest
bidirectional Granger causality between energy consumption and real GDP, and Granger
endogeineity in the system. Since the energy sector largely contributes to carbon emissions in
Australia, we suggest that direct measures to reduce carbon by putting constraints on the energy
consumption would pose significant economic costs for the Australian economy.