- Energy, Growth, Bound Test, Causal Relationship, Bangladesh.
Abstract
Despite the great interest in the energy-growth nexus over the world, the energy-growth nexus is always overlooked by the prior researchers of Bangladesh. Using the data set of the period 1979-2014, the study injects new insights into the scant knowledge about the nexus between the two aggregated variables in the country. To do so, the study investigates both long-run and short-run causal relationship applying a developed method of bound testing (ARDL) and dynamic VEC model, respectively. The estimation results find strong long-run relationship between the energy consumption and economic growth and in the short-run energy consumption has significant impact on economic growth in Bangladesh. But the VECM Granger causality test finds no causality running in either direction. Therefore, the study suggests that energy conservation policy should be revised as growth is inevitable without energy in Bangladesh.