Interactions between energy consumption,international trade,and real income in Canada: An empirical investigation from a new version of the Solow growth model |
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Authors: | Salih Katırcıoğlu Sami Fethi Demet Beton Kalmaz Dilber Çağlar |
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Affiliation: | 1. Department of Banking and Finance, Eastern Mediterranean University, North Cyprus, Turkey;2. Department of Business Administration, Eastern Mediterranean University, North Cyprus, Turkey;3. Faculty of Economics and Administrative Sciences, European University of Lefke, Gemikonagi, North Cyprus, Turkey;4. Faculty of Economics and Administrative Sciences, Girne American University, Kyrenia, North Cyprus, Turkey |
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Abstract: | This study investigates the empirical relationship between energy consumption, international trade, and real income in Canada which has an important role in global energy and trade. It employs bound tests to level relationships and conditional error correction models through ARDL specification to a new version of the Solow Growth model. Using annual data of the 1960–2010 period, results reveal a long-term relationship between energy consumption, international trade, and real income in Canada. It is also found that energy exporting activity is the determinant (driver) of energy consumption through the channel of real income and energy consumption is the determinant (driver) of exports through the channel of real income in the long term of the Canadian economy. Exports and energy use are the determinants (drivers) of real income in the long term of the Canadian economy; therefore, as conditional Granger causality tests suggest there is feedback relationship between energy consumption, international trade, and real income in the long term of the Canadian economy. The present study suggests that any energy conservation policies are likely to have negative influence on output and international trade in Canada. |
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Keywords: | Bounds test Canada energy consumption International trade Solow growth model |
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