Revisiting the Energy-Growth nexus with debt channel. A wavelet time-frequency analysis for a panel of Eurozone-OECD countries

Mohamed AWADA; Roman MESTRE; Mohamed AWADA; Roman MESTRE

doi:10.3934/DSFE.2023008

Data Science in Finance and Economics

2023, Volume 3, Issue 2: 133-151. doi: 10.3934/DSFE.2023008

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Revisiting the Energy-Growth nexus with debt channel. A wavelet time-frequency analysis for a panel of Eurozone-OECD countries

Mohamed AWADA ¹,
Roman MESTRE ^{2
,
,}

1.
CRESEM, Université de Perpignan Via Domitia, Perpignan, France
2.
MRE, Université de Montpellier, Montpellier, UFR Economie Avenue Raymond Dugrand 34960 Montpellier, France

Received: 17 March 2023 Revised: 22 April 2023 Accepted: 24 April 2023 Published: 10 May 2023
JEL Codes: C22, C30, F43, H63, Q41

In this paper, continuous wavelet decompositions regarding the notions of coherence and phase are used to analyze the time-frequency dynamics of the existing relationships between energy supply and economic growth for a group of European countries. The objective is to identify both the intensity and the direction of the relationship over time and across frequencies. We also study the existence of a debt channel implying an indirect relationship between energy and growth. Our results show the complexity of the energy supply-growth relationship composed by direct effect at the short run and indirect effects through debt channel at the mid and long run. The countries with the highest debt/GDP ratio are more subject to such direct and indirect effects than others where only short run direct effect is noted.
- wavelet analysis,
- OECD European countries,
- energy supply,
- public debt,
- economic growth
Citation: Mohamed AWADA, Roman MESTRE. Revisiting the Energy-Growth nexus with debt channel. A wavelet time-frequency analysis for a panel of Eurozone-OECD countries[J]. Data Science in Finance and Economics, 2023, 3(2): 133-151. doi: 10.3934/DSFE.2023008

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Abstract

In this paper, continuous wavelet decompositions regarding the notions of coherence and phase are used to analyze the time-frequency dynamics of the existing relationships between energy supply and economic growth for a group of European countries. The objective is to identify both the intensity and the direction of the relationship over time and across frequencies. We also study the existence of a debt channel implying an indirect relationship between energy and growth. Our results show the complexity of the energy supply-growth relationship composed by direct effect at the short run and indirect effects through debt channel at the mid and long run. The countries with the highest debt/GDP ratio are more subject to such direct and indirect effects than others where only short run direct effect is noted.

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