The relationship between woody biomass consumption and economicgrowth: Nonlinear ARDL and causality

In this paper, the structure of the relationship between woody biomass energy consumption and real perCapita GDP was analyzed in the period of 1980–2012 for the selected African countries by ARDL (Autore-gressive Distributed Lag), nonlinear ARDL, Granger causality and forecast error variance decompositionmethods. After a symmetric relationship between woody biomass energy consumption and economicgrowth was determined by the nonlinear ARDL (NARDL) model, ARDL and Granger Causality methodswere applied. According to results of the Granger Causality method, there is a unidirectional causalityrunning from economic growth to woody biomass energy consumption for Botswana, Cameroon, Uganda,and Zambia and from woody biomass energy consumption to economic growth for Burkina Faso, Malawi, Central African Republic, Namibia, Côte d’Ivoire, Djibouti, Gabon and Zimbabwe. The bidirectional causal-ity was supported for Kenya, Lesotho, Madagascar and Togo. Lastly, forecast error variance decompositionmethod was applied to support the results obtained from Granger Causality method. The forecast errorvariance decomposition results of real per Capita GDP and woody biomass energy consumption showedthat woody biomass energy and real per Capita GDP made the important contribution to the forecasterror variance of itself and each other.