Title: Energy consumption and gross domestic product in the Philippines: an application of maximum entropy bootstrap framework
Authors: Kenneth Barroga; Agustina Tan-Cruz
Addresses: Department of Science and Technology, Regional No. 11, Bajada, Davao City, 8000, Philippines ' School of Applied Economics, University of Southeastern Philippines, Obrero, Davao City, 8000, Philippines
Abstract: We employ the maximum entropy bootstrap (MEB) framework to provide convincing evidence on the energy consumption (EC) and gross domestic product (GDP) nexus between 1975 and 2010 in the Philippines. We also perform a cointegration analysis and Granger causality test of the data to illustrate the advantages of MEB approach. This paper shows more accurate inference in comparison to conventional hypothesis tests based on asymptotic theory. Without employing MEB, the result of causality is very sensitive to a very small sample size and time period chosen that made the results inconsistent. Therefore, MEB framework is robust to time period chosen and even in a very small sample size. The analysis shows no evidence of a causal relationship between EC and GDP in the Philippines. The findings emphasise the fact that the Philippines is a less developed country and predominantly agrarian-based; thus, energy dependent.
Keywords: bootstrap; cointegration; EC; energy consumption; GDP; granger causality; HDR; highest density region; MEB; maximum entropy bootstrap.
International Journal of Computational Economics and Econometrics, 2018 Vol.8 No.1, pp.1 - 17
Available online: 18 Sep 2017 *Full-text access for editors Access for subscribers Free access Comment on this article