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An Econometric Study of Economic Growth, Energy and Exports in Mauritius: Implications for Trade and Climate Policy

  • Riad Sultan

    (Department of Economics and Statistics, Faculty of Social Studies and Humanities, University of Mauritius,Reduit, Mauritius)

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    While electricity from fossil fuels is among a major source of greenhouse gases and global warming, it is also a key resource in the industrial sector geared towards exports and economic growth. This study attempts to examine the export-GDP nexus and electricity-GDP nexus in addition to a supplementary hypothesis between exports and electricity in Mauritius for the period of 1970- 2009. An augmented neo-classical aggregate production model is used. The ARDL bounds test and the Johansen cointegration test confirm the existence of a long-run relationship between these variables. The multivariate Granger-causality analysis indicates that electricity and exports Granger-cause economic growth in the long-run. Electricity remains a significant causal variable in the short-run and is also found to lead exports. The empirical findings suggest that conserving electricity as a climate policy may not be conducive for exports and economic growth. The use of renewable sources for electricity may be the right option.

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    Article provided by Econjournals in its journal International Journal of Energy Economics and Policy.

    Volume (Year): 2 (2012)
    Issue (Month): 4 ()
    Pages: 225-237

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    Handle: RePEc:eco:journ2:2012-04-3
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