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Electricity consumption and economic growth in transition countries: A revisit using bootstrap panel Granger causality analysis

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  • Wolde-Rufael, Yemane

Abstract

The purpose of this paper is to revisit the Granger causal relationship between electricity consumption and economic growth for 15 transition economies for the period 1975–2010 using a bootstrap panel causality approach that allows for both cross-sectional dependency and for heterogeneity across countries. Applying this approach, we found a unidirectional causality running from electricity consumption to economic growth only in Belarus and Bulgaria; from economic growth to electricity consumption in the Czech Republic, Latvia, Lithuania and the Russian Federation; bidirectional causality only in Ukraine while no Granger causality in any direction in Albania, Macedonia, Moldova, Poland, Romania, Serbia, Slovak Republic and Slovenia. These results show that there is a limited support for the electricity-led growth hypothesis. Nevertheless these different findings provide important implications for energy strategies and policies for transition countries.

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  • Wolde-Rufael, Yemane, 2014. "Electricity consumption and economic growth in transition countries: A revisit using bootstrap panel Granger causality analysis," Energy Economics, Elsevier, vol. 44(C), pages 325-330.
  • Handle: RePEc:eee:eneeco:v:44:y:2014:i:c:p:325-330
    DOI: 10.1016/j.eneco.2014.04.019
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    More about this item

    Keywords

    Electricity consumption; Economic growth; Panel bootstrap causality; Cross-sectional dependency; Slope heterogeneity;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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