The dynamic nexus of energy consumption, international trade and economic growth in BRICS and ASEAN countries: A panel causality test.

This study explores the dynamic relationship of energy consumption, international trade and foreign direct investment (FDI) with economic growth for a panel of BRICS and ASEAN countries over the period of 1990–2017 within a multivariate framework. The panel co-integration test, panel quantile regression method, impulse response function and heterogeneous panel causality test are used for empirical investigation. The results reveal the existence of a long-run equilibrium relationship among the variables. In the long run, the effects of energy consumption, international trade, capital and FDI are found to be positive and significant on the economic growth of these countries. The heterogeneous panel causality test results indicate bidirectional causality between energy consumption and economic growth, labour force and economic growth, international trade and energy consumption, and labour force and international trade. A unidirectional causality from economic growth to international trade and FDI, and from international trade and energy consumption to FDI is also identified. The implications of these results are also discussed. • A dynamic link of energy use, international trade and economic growth is explored. • Panel data of BRICS and ASEAN countries are considered for this study. • Energy use and international trade positively affect economic growth. • Effect of energy is three times more than that of trade on economic growth. • A bidirectional causality between energy use and economic growth is found. [ABSTRACT FROM AUTHOR]