Multivariate granger causality between electricity consumption, exports and GDP: Evidence from a panel of Middle Eastern countries

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...

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Bibliographic Details
Published in:Energy policy 2009, Vol.37 (1), p.229-236
Main Authors: Narayan, Paresh Kumar, Smyth, Russell
Format: Article
Language:English
Subjects:
Applied sciences
Causality
Correlation analysis
Economic data
Economic growth
Electric energy
Electricity
Electricity Middle East Causality
Energy
Energy consumption
Energy economics
Energy policy
Exact sciences and technology
Exports
GDP
General, economic and professional studies
Gross Domestic Product
Methodology. Modelling
Middle East
Studies
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Summary: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 per cent increase in exports increases GDP by 0.17 per cent and a 1 per cent increase in GDP generates a 0.95 per cent 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.
ISSN:0301-4215
1873-6777
DOI:10.1016/j.enpol.2008.08.020