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Advisor(s)
Abstract(s)
In the literature, the causal relationship between oil consumption and
economic growth has been poorly studied. Portugal is a medium-sized economy, which
has experienced several episodes that make it of particular interest in the study of
periods of economic expansion and stagnation. Portugal is constrained by external
energy dependency and, due to international commitments, it is also faced with energy
preservation policies that may have deep implications to its economic growth. This
article examines the causal nexus between economic growth and oil consumption in
Portugal, using the ARDL bounds test approach with annual time series data from
1965 to 2009. Results suggest that oil consumption causes growth in the long run
and short run, and growth causes oil consumption in the long run and short run.
Therefore, an energy policy that reduces oil consumption puts a slight constraint
on gross domestic product growth, but growth strongly contributes to heightening
Portugal’s oil dependence.
Description
Keywords
ARDL bounds test Economic growth Long and short run elasticities Oil consumption