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Causal Interaction among Electricity Consumption, Financial Development, Exports and Economic Growth in Jordan: Dynamic Simultaneous Equation Models

Author

Listed:
  • Ali Matar

    (Department of Financial Science and Banking, Jadara University, Irbid, P.O. 733, Postal Code 21110, Jordan)

  • Hussain Ali Bekhet

    (Graduate Business School, College of Graduate Studies, Universiti Tenaga Nasional (UNITEN), Malaysia.)

Abstract

The goal of this paper is to examine the empirical dynamic relationship among the electrical consumption (ELC) and economic growth (proxies by gross domestic product [GDP] per capita), export, and financial development (domestic credit to the private sector as a percentage of GDP) in Jordan over the 1976-2011 period. Annual time series data and the autoregressive distributed lag model are used. The augmented Dickey Fuller, F-bound testing, Granger causality, GIRF, and cumulative sum of recursive residuals, cumulative sum of squares tests were applied to test the stationary, cointegration, causality and stability, respectively, among the variables. There is evidence of a long-term equilibrium relationship between electricity consumption and the economic growth, and a unidirectional relationship runs from real GDP to ELC. This is indicating that per capita increase in economic growth may cause a perpetual rise in the ELC in Jordan.

Suggested Citation

  • Ali Matar & Hussain Ali Bekhet, 2015. "Causal Interaction among Electricity Consumption, Financial Development, Exports and Economic Growth in Jordan: Dynamic Simultaneous Equation Models," International Journal of Energy Economics and Policy, Econjournals, vol. 5(4), pages 955-967.
    • Handle: RePEc:eco:journ2:2015-04-07
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    References listed on IDEAS

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    Cited by:

    1. Ali Matar, 2020. "Does electricity consumption impacting financial development? Wavelet analysis," Future Business Journal, Springer, vol. 6(1), pages 1-9, December.
    2. Bekhet, Hussain Ali & Othman, Nor Salwati, 2018. "The role of renewable energy to validate dynamic interaction between CO2 emissions and GDP toward sustainable development in Malaysia," Energy Economics, Elsevier, vol. 72(C), pages 47-61.
    3. Richard Gardiner & Petr Hajek, 2020. "Interactions among energy consumption, CO2, and economic development in European Union countries," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(4), pages 723-740, July.
    4. Nora Yusma Mohamed Yusoff & Hussain Ali Bekhet & S.M. Mahrwarz, 2020. "Dynamic Relationships between Energy Use, Income, and Environmental Degradation in Afghanistan," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 51-61.
    5. Sofia Karagiannopoulou & Grigoris Giannarakis & Emilios Galariotis & Constantin Zopounidis & Nikolaos Sariannidis, 2022. "The Impact of Dow Jones Sustainability Index, Exchange Rate and Consumer Sentiment Index on Carbon Emissions," Sustainability, MDPI, vol. 14(19), pages 1-19, September.
    6. Al Aali-Bujari & Francisco Venegas-Mart nez & Roberto J. Santill n-Salgado, 2018. "On the Stock Market-Electricity Sector Nexus in Latin America: A Dynamic Panel Data Model," International Journal of Energy Economics and Policy, Econjournals, vol. 8(6), pages 148-154.
    7. Kilinc-Ata, Nurcan & Proskuryakova, Liliana N., 2023. "Empirical analysis of the Russian power industry's transition to sustainability," Utilities Policy, Elsevier, vol. 82(C).
    8. Al-Bajjali, Saif Kayed & Shamayleh, Adel Yacoub, 2018. "Estimating the determinants of electricity consumption in Jordan," Energy, Elsevier, vol. 147(C), pages 1311-1320.
    9. Ahmad Alshwawra & Ahmad Almuhtady, 2020. "Impact of Regional Conflicts on Energy Security in Jordan," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 45-50.
    10. Hussain Ali Bekhet & Nor Hamisham Harun, 2017. "Elasticity and Causality among Electricity Generation from Renewable Energy and Its Determinants in Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 7(2), pages 202-216.
    11. Bekhet, Hussain Ali & Latif, Nurul Wahilah Abdul, 2018. "The impact of technological innovation and governance institution quality on Malaysia's sustainable growth: Evidence from a dynamic relationship," Technology in Society, Elsevier, vol. 54(C), pages 27-40.

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    More about this item

    Keywords

    Electricity Consumption; Economic Growth; Co-integration; Autoregressive Distributed Lag; Causality; Jordan;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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