Natural gas consumption and economic growth: Evidence from selected natural gas vehicle markets in Europe

Abstract

In this study, the relationship between natural gas consumption (NGC) and economic growth is examined. Twelve (12) countries in Europe are considered, 10 of which make up the top natural gas vehicle (NGV) markets in Europe. The study considers four main variables in this exercise, namely; gross fixed capital formation, labour force, trade openness, and real GDP. It makes use of panel cointegration analysis and long-run vector error correction model analysis in assessing both the short-run and the long-run relationship dynamics between NGC and economic growth. The results show that a long-run impact of NGC on economic growth does indeed exist. In the short run, however, this does not seem to be the case. The results also suggest the existence of the growth hypothesis in Austria, Bulgaria and Switzerland, while the United Kingdom (UK) and Italy support the conservation hypothesis.