ENERGY CONSUMPTION AND ECONOMIC DEVELOPMENT

INTRODUCTION
The main objective of this paper is to: 1. Empirically examine the relationship between economic growth and total energy consumption. 2. To find the direction of causation of the above relationship.That is, whether economic growth leads to energy consumption or that energy consumption is the engine of economic growth. . To find out the relationship between economic growth and sectors of energy consumptions. !. To empirically determine which sector of energy is most important for economic development and vice cersa. ". To see the effect of price on consumption of energy.#or example, how household and industries react on changing prices of coal or petroleum. $. To compare various states of india on energy fronts. %. To compare &ndia with other major countries of the world on consumption and production of energy and also to see the relationship between economic development and energy consumption and vice versa. '. & will ta(e petroleum,electricity and natural gas as three sources of energy for my paper. REVIEW OF LITERATURE: )ith the use of econometrics, the relationship between energy consumption and economic growth has been examined for different countries and different periods . &n 2**1,Anjum Aqeel and M !ammad Sa"#!udd#n $u%% studied the the causal relationship between energy consumption and economic growth and energy consumption and employment in +a(istan by applying techni,ues of co-integration and .siao/s version of 0ranger causality.Economic growth also leads to growth in petroleum consumption, while on the other hand, neither economic growth nor gas consumption affect each other. Vale&#a C '%an%#n# and C!#a&a Ma&%#n# have analysed the causal relationship between economy and energy by adopting a 1ector Error 2orrection 3odel for non-stationary and cointegrated panel data with a large sample of 4E25 and 646 4E25 and four distinct energy sectors namely industry, service, residential and transport.&n the industrial sector, there is a converging trend in the short-run but the causality directions diverge when a strong causality hypothesis is tested separately for the two sub-samples that is 4E25 and 646 4E25 countries.&t is also found out that causality direction changes when short run and long run time period is ta(en into account. &n the short-run, it is the economic growth process that determines the energy consumption.&n the long-run causality is the opposite, showing that reductions in energy consumption could influence economic performance . E&man E&"a()al investigated energy consumption economic growth relation disaggregates using oil and electricity consumption for energy consumption for 17%*-2** . &t was found out that both electricity consumption and petroleum consumption have a positive effect on economic growth in the short run.

MET*ODOLOGY:
The test for causal relationship between energy consumption and economic growth in a panel context is usually conducted in three steps. 1. The order of integration in the economic and energy time series variables is tested. 2. 8econd, having established the order of integration in the series, panel cointegration tests are used to examine the long-run relationships between the variables in ,uestion.)hen cointegration is found, the problems of differencing can be avoided: a 1ector 9utoregression model :19;< can be used to chec( whether a stationary linear combination of non-stationary variables exists implying that a long-run e,uilibrium relationship holds between the variables. . The last phase is represented by employing dynamic panel causality tests in order to evaluate the short-run and log-run direction of causality between the variables examined.

DATA SOURCE:
1.&nternational Energy 9gency data source for different countries. 2.Energy 8tatistics by 284 for &ndia.

CONCLUSION:
&t will be done based on the results.This study will be be firstly for &ndia and a comparison will be done for various &ndian states. 8econdly &ndia will be compared with some of the different developed countries of the world.