—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.
—ARDL, DOLS, economic performance, energy
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: firstname.lastname@example.org).
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.