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Electricity Consumption and Economic Growth Causality Revisited: Evidence from Turkey

Author

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  • Muhammad Shahbaz

    (Energy Research Center, COMSATS Institute of Information Technology, Lahore, Pakistan)

  • Ilhan Ozturk

    (Faculty of Economics and Administrative Sciences,Cag University, 33800, Mersin, Turkey)

  • Amjad Ali

    (School of Social Sciences, National College of Business Administration and Economics, 40/E-1, Gulberg III, Lahore-54660, Pakistan)

Abstract

The study reconsiders the relationship between electricity consumption and economic growth by incorporating financial development, capital and labor as important factors of production using augmented production function in Turkey for the period of 1971-2009. In doing so, we applied the ARDL bounds testing approach and found long run relationship between electricity consumption, economic growth, financial development, capital and labour. Further, results indicated that electricity consumption, financial development, capital and labor have positive effect on economic growth. The VECM Granger causality analysis shows bidirectional causality between electricity consumption, economic growth, financial development, capital and labor. The findings have important policy implication to sustain economic growth through comprehensive energy policy and developing financial sector in Turkey

Suggested Citation

  • Muhammad Shahbaz & Ilhan Ozturk & Amjad Ali, 2015. "Electricity Consumption and Economic Growth Causality Revisited: Evidence from Turkey," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 3(4), pages 176-193, December.
  • Handle: RePEc:ijr:beejor:v:3:y:2015:i:4:p:176-193
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    More about this item

    Keywords

    Electricity consumption; Financial development; Economic growth;
    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
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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