Abstract:
This article re-examines the nature of the causality between natural gas consumption and
economic growth in G7 countries over the period from 1965 to 2011. We employ the Granger
causality procedure proposed by Emirmahmutoglu and Kose (2011) which takes into account
cross-sectional dependency and heterogeneity across countries. Our overall empirical results
support the neutrality hypothesis for the panel while the individual country results confirm the
same result with the exception of the case of UK, where the conservation hypothesis is confirmed,
showing that GDP causes natural gas consumption in the country. These results make
policies that promote the consumption of natural gas risk-free with regard to their effects to the
economic growth and development levels.
