• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing: Engineering & Technology Digital Library, ProQuest, Crossref, Electronic Journals Library, DOAJ , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2010 Vol.1(3): 261-267 ISSN: 2010-023X
DOI: 10.7763/IJTEF.2010.V1.47

Dynamic Cointegration Link between Energy Consumption and Economic Performance: Empirical Evidence from Malaysia

Loganathan, Nanthakumar and Thirunaukarasu Subramaniam
Abstract—During the past three decades, demand for energy in Malaysia grew rapidly, increasing at an average rate of 5% in the 1980s and 12% in 2009, surpassing the gross domestic product growth of 5%; and 3% over the corresponding period. The main objective of this study is to identify sustainability between energy consumption and economic performances during the past three decades by applying Ordinary Least Square Engel-Granger (OLS-EG), Dynamic Ordinary Least Square (DOLS), Autoregressive Distributed Lag (ARDL) bounds testing approach and Error Correction Model (ECM). Utilizing data from 1971-2008, the findings of this study reveals that there is a bidirectional co-integration effects between total energy consumption and Malaysia’s economic performance. The key result from this study shows that, energy consumption in Malaysia is on sustainable limits with 57% speed of adjustment to reach long run equilibrium caused by short run shocks in Malaysia’s economic performance.

Index Terms—ARDL, DOLS, economic performance, energy consumption, OLS-EG.

Loganathan, Nanthakumar is with the Department of Economics, Faculty of Management and Economics, University Malaysia Terengganu (UMT), 21030 Kuala Terengganu, Terengganu, Malaysia.
Phone: (609)-6684154; e-mail: kumar@ umt.edu.my)
Thirunaukarasu Subramaniam is with the Department of South East Asian Studies, Faculty of Arts and Social Sciences, University of Malaya, 50603 Kuala Lumpur, Malaysia Phone: (603)-79675610 e-mail: stkarasu@um.edu.my).

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Cite:Loganathan, Nanthakumar and Thirunaukarasu Subramaniam, "Dynamic Cointegration Link between Energy Consumption and Economic Performance: Empirical Evidence from Malaysia," International Journal of Trade, Economics and Finance vol.1, no.3, pp. 261-267, 2010.

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