The causal relationship between natural gas consumption and economic growth: Evidence from the G7 countries

This paper re-examines the nature of the causality between natural gas consumption and economic growth in G-7 countries using a Granger causality procedure based on meta-analysis in heterogeneous mixed panels which takes into account cross-sectional dependence and heterogeneity across countries. Empirical results from annual data covering the period from 1965 to 2011, indicate no causal relationship in any direction between economic growth and natural gas consumption; implying that these two variables are not sensitive to each other. This finding is in line with individual country results, except the United Kingdom, which provides support for a unidirectional causality running from GDP to natural gas consumption. Therefore, energy policy geared towards a reduction in natural gas consumption may not significantly affect the economic growth.