Multivariate Granger Causality between Electricity Consumption, Exports and GDP: Evidence from a Panel of Middle Eastern Countries
Energy Policy, 37(1): 229-236, 2009
Posted: 11 Jun 2012
Date Written: 2009
Abstract
This paper examines the causal relationship between electricity consumption, exports and gross domestic product (GDP) for a panel of Middle Eastern countries. We find that for the panel as a whole there are statistically significant feedback effects between these variables. A 1 per cent increase in electricity consumption increases GDP by 0.04 per cent, a 1 percent increase in exports increases GDP by 0.17 per cent and a 1 percent increase in GDP generates a 0.95 percent increase in electricity consumption. The policy implications are that for the panel as a whole these countries should invest in electricity infrastructure and step up electricity conservation policies to avoid a reduction in electricity consumption adversely affecting economic growth. Further policy implications are that for the panel as a whole promoting exports, particularly non-oil exports, is a means to promote economic growth and that expansion of exports can be realized without having adverse effects on energy conservation policies.
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