The causality between energy consumption and economic growth in United Kingdom

Abstract

This study aims to examine the relationship between the energy consumption (EC) and economic growth (GDP) in the United Kingdom during the period between 1987 and 2007. Augmented Dickey-Fuller (ADF) and Philips-Perron (PP) unit root tests, the Johansen Cointegration test and standard Granger causality test were applied to examine the relationship between EC and GDP. Since the analysis results indicated no cointegration relationship between the variables of EC and GDP, it was found that there is no long-term relationship between the variables; however, in the short run, there is a unidirectional causality relationship from GDP to EC.