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The relationship between an electricity supply ceiling and economic growth: An application of disequilibrium modeling to Taiwan

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  • Mototsugu Fukushige

    ()
    (Graduate School of Economics, Osaka University)

  • Hiroshige Yamawaki

    (Graduate School of Economics, Osaka University)

Abstract

Using a disequilibrium model, we investigate the relationship between the supply constraint of electricity generation capacity and electricity demand in Taiwan. We find that electricity consumption faced supply constraints in Taiwan between 1959 and 1972, but that after 1973 generation capacity grew rapidly, such that economic growth came to be the major determinant of electricity consumption. Our experience in fitting this disequilibrium model suggests that simple causality tests are not a proper means to understand the relationship between electricity consumption and economic growth. Our results also suggest, at least for developing countries, that an electricity supply constraint sometimes plays an important role when investigating the relationship between energy consumption and economic growth.

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Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 13-11.

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Length: 20 pages
Date of creation: Jun 2013
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Handle: RePEc:osk:wpaper:1311

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Web page: http://www.econ.osaka-u.ac.jp/
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Keywords: Electricity Supply; Economic Growth; Disequilibrium Model; Taiwan;

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