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Electricity Consumption and Economic Growth in Portugal: Evidence from a Multivariate Framework Analysis

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  • Chor Foon Tang
  • Eu Chye Tan

Abstract

The purpose of this study is to re-visit the relationship between electricity consumption and economic growth in Portugal over the sample period of 1974 to 2008 in a multivariate framework. The results of this study indicate that the variables are cointegrated and the causal relationship between electricity consumption and economic growth in Portugal is bi-directional. Uni-directional causalities running from energy price and real income to employment are also found. Contrary to earlier studies, our results indicate that Portugal is an energy-dependent economy and energy-conservation policies could be detrimental to its economic growth and development. Therefore, renewable energy sources such as bio-fuel, solar power, hydro power, wind power, and wave power should be aggressively explored to ensure sufficient supply of energy to support the growth of the Portuguese economy in an environment-friendly manner.

Suggested Citation

  • Chor Foon Tang & Eu Chye Tan, 2012. "Electricity Consumption and Economic Growth in Portugal: Evidence from a Multivariate Framework Analysis," The Energy Journal, , vol. 33(4), pages 22-48, October.
    • Handle: RePEc:sae:enejou:v:33:y:2012:i:4:p:22-48
    DOI: 10.5547/01956574.33.4.2
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