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http://dx.doi.org/10.3741/JKWRA.2004.37.10.869

Does Water Consumption Cause Economic Growth Vice-Versa, or Neither? Evidence from Korea  

Lim, Hea-Jin (Department of Economics, Korea University)
Yoo, Seung-Hoon (School of Business and Economics, Hoseo University)
Kwak, Seung-Jun (Department of Economics, Korea University)
Publication Information
Journal of Korea Water Resources Association / v.37, no.10, 2004 , pp. 869-880 More about this Journal
Abstract
The purpose of this study is to examine relationship between water consumption and economic growth in Korea, and to obtain policy implications of the results. To this end, we attempt to provide more careful consideration of the causality issues by applying rigorous techniques of Granger causality. Tests for unit roots, co-integration, and Granger causality based on an error-correction model are presented. The existence of bi-directional causality between water consumption and economic growth in Korea is detected. This finding has various implications for policy analysts and forecasters in Korea. Economic growth requires enormous water consumption, though there are many other factors contributing to economic growth, and water consumption is but one part of it. Thus, this study generates confidence in decisions to invest in the water supply infrastructure. Moreover, this study lends support to the argument that an increase in real income, ceteris paribus, gives rise to water consumption. Economic growth results in a higher proportion of national income spent on water supply services and stimulates further water consumption.
Keywords
Water consumption; Korea; Economic growth; Granger causality; Unit root; Co-intergration; Error correction model;
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Times Cited By KSCI : 1  (Citation Analysis)
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