Coal Consumption and Economic Growth in Taiwan

Abstract The purpose of this paper is to examine the causality issue between coal consump tion and economic growth for Taiwan. The co-integration and Granger's causality test are applied to investigate the relationship between the two economic series. Results of the co-integration and Granger's causality test based on 1954 - 1997 Taiwan data show a unidirectional causality from economic growth to coal con sumption with no feedback effects. Our major finding supports the neutrality hypothesis of coal consumption with respect to economic growth. Further, the finding has practical policy implications for decision makers in the area of macro-economic planning, as coal conservation is a feasible policy with no damaging repercussions on economic growth. Keywords: Coal ;Consumption;Co-integration;Economic;Growth;Granger ;Causality;Neutrality ;Hypothesis

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