پس انداز، درآمد و مصرف انرژی
Abstract
1-Introduction
2-Brief Literature Review
3-Methodology of the Study
4-Estimation Methodology
5-Empirical Results and Analysis
6-Conclusion
References
Abstract
The article investigates the relationship between the energy consumption, gross domestic savings and gross domestic income of G7 countries by using the time series data from 1970-2012. The study employs the recently developed ARDL- bounds testing approach. The article finds there is strong evidence that growth rate of income, gross domestic savings play a stronger role in determining the short run and long run behavior of energy consumption per capita in G7 countries. The empirical results suggested that in most of the countries the relationship of consumption per capita and gross domestic income is positive, that means when the income rises the consumption will also rise but not necessarily at the same rate, which is in accordance with theory of Keynes of marginal propensity to consume, confirming the absolute income hypothesis. On the other hand the gross domestic savings has a negative relationship with the energy consumption per capita which confirms the same relationship of consumption as the function of difference of income and savings in long run. The Parameters of error correction terms in USA and France are -0.4283 and -0.6190 represents the speed of adjustment is very high and it would return back to the equilibrium level very quickly. While countries like Canada, Germany, and Great Britain are having the parameters of the error correction term as -0.0794, -0.2205, and -0.0867 suggests speed of adjustments is fairly very small and would take time to return to its equilibrium position. While the error correction coefficient in case of Japan is equal to -1.0183, and also statistically significant showing that convergence is more elastic. The study suggests that although Japan, Italy, USA, France are more industrially advanced countries as production is mostly based on industries. The income generated on the basis of the energy consumption in their industries may be used as forced savings to further boost the economy that will definitely affects their growth performance positively in the long run. The reliability and validity of the estimations results are confirmed by the diagnostics tests.
Introduction
The savings and income play a vital role in the development of any economy. The industrialized nations are predominantly depending on the income and savings. The economic theories have more emphasized the role of savings and investment in the economy that economic growth heavily depends on saving and investment. HarrodDomar growth model emphasized the role of economic growth of a country mostly depends on incremental capitaloutput ratio, savings rates or and investment. The higher saving rates in any country implies positive economic growth and thus raising per capita income. The empirical evidences from the literature strongly support the rate of savings to achieve a higher level of per capita income. The industrialized nations mostly emphasized on saving and reinvestment which improves the per capita income and thus improving the standard of living. Most of the studies have been conducted in the past about the saving rates and economic growth. It is argued in the literature that the country’s whose economy is developing, at the same time the rate of savings is also increased. Thus it was observed that savings and economic growth are strongly correlated. They further argued that the rapid economic developing countries have a positive impact on economic growth and thus contributing to the rise per capita income. But on the other hand the countries whose savings rate is very low results in steady development. The rest of the article is organized as follows. Section 2 highlights brief literature review. Section 3 elucidates the data and model specification. Section 4 explains econometric methodology. Section 5 outlines the empirical results. Finally section 6 concludes.