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Short-run and Long-run causality between electricity consumption and economic growth in a small open economy

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  • HAMDI, Helmi
  • SBIA, Rashid

Abstract

The aim of this paper is to investigate the causal relationship between electricity consumption and GDP growth for the kingdom of Bahrain during the period 1980–2008. By performing an error-correction model, our results reveal that electricity consumption and GDP are cointegrated. The granger causality tests indicate bi-directional relationship between electricity consumption and GDP growth in the long-run while results of the short-run reveal unidirectional causality relationship between the two variables.

Suggested Citation

  • HAMDI, Helmi & SBIA, Rashid, 2012. "Short-run and Long-run causality between electricity consumption and economic growth in a small open economy," MPRA Paper 49904, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:49904
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    File URL: https://mpra.ub.uni-muenchen.de/49904/1/MPRA_paper_49904.pdf
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    References listed on IDEAS

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    1. Narayan, Paresh Kumar & Smyth, Russell, 2008. "Energy consumption and real GDP in G7 countries: New evidence from panel cointegration with structural breaks," Energy Economics, Elsevier, vol. 30(5), pages 2331-2341, September.
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    7. World Bank, 2009. "World Development Indicators 2009," World Bank Publications, The World Bank, number 4367, June.
    8. Mozumder, Pallab & Marathe, Achla, 2007. "Causality relationship between electricity consumption and GDP in Bangladesh," Energy Policy, Elsevier, vol. 35(1), pages 395-402, January.
    9. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
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    More about this item

    Keywords

    Electricity consumption; Growth; Bahrain; cointegration; Granger causality;

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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