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Multivariate Granger causality between electricity generation, exports, prices and GDP in Malaysia

  • Hooi Hooi Lean
  • Russell Smyth

This paper employs annual data for Malaysia from 1970 to 2008 to examine the causal relationship between economic growth, electricity generation, exports and prices in a multivariate model. We find that there is unidirectional Granger causality running from economic growth to electricity generation. However, neither the export-led nor handmaiden theories of trade are supported and there is no causal relationship between prices and economic growth. The policy implication of this result is that electricity conservation policies, including efficiency improvement measures and demand management policies, which are designed to reduce the wastage of electricity and curtail generation can be implemented without having an adverse effect on Malaysia's economic growth.

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File URL: http://dx.doi.org/10.1016/j.energy.2010.05.008
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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number archive-43.

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Length: 9 pages
Date of creation: 2010
Date of revision:
Publication status: published in Energy, 2010, 35(9):3640-3648
Handle: RePEc:mos:moswps:archive-43
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Department of Economics, Monash University, Victoria 3800, Australia

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