Top PDF Electricity consumption and economic growth nexus: Evidence from MENA countries

Electricity consumption and economic growth nexus: Evidence from MENA countries

Electricity consumption and economic growth nexus: Evidence from MENA countries

But in the same time the role of energy can be neutral vis-à-vis economic growth because the energy cost is very low relative to GDP, and thus energy consumption is not likely to have a significant impact on output growth. Hence, imposing taxes to reduce electricity consumption or implementing a conservation policy will not harm economic growth (e.g. Acaravci, 2012). Wolde-Rufael (2006) and Narayan and Smith (2009) advance also that the lack of causality in both directions (i.e. neutrality hypothesis) implies that measures to save electricity usage can be taken without compromising economic growth. This can be explained by the fact hat developing countries have not yet reached a high level of electricity autonomy which allows them to reduce their energy use. This not means that these economies can not prevent the negative consequences associated to an increase of electricity consumption. Instead of making electricity accessible to overall economic sectors, this can improve the quality of population’s lives and ahieve economic growth and then reduce poverty. More recently and in the same context, Shaari et al. (2012) add that any policy in terms of energy consumption should be revisited to ensure that it will not affect economic growth.
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CO2 Emissions, Energy Consumption and Economic Growth Nexus in MENA countries: Evidence from Simultaneous Equations Models

CO2 Emissions, Energy Consumption and Economic Growth Nexus in MENA countries: Evidence from Simultaneous Equations Models

consumption has a significant positive impact on GDP per capita for Algeria, Bahrain, Iran, Kuwait, Oman, Qatar, Saoudi Arabia, Tunisia and the United Arab Emirates, an insignificant positive impact for Jordan, Morocco and Syria, and a significant negative impact for Egypt and Lebanon. This suggests that an increase in energy consumption per capita tends to decrease economic growth in Egypt and Lebanon. From the elasticities, it can also be inferred that due to the increase in EC per capita, growth goes down more in Lebanon than in Egypt (0.414 > 0.179). The panel estimation has a significant positive impact on GDP per capita. The coefficient is 0.321, indicating that GDP per capita increases by 0.321% when there is a 1% increase in energy consumption. This indicates that an increase in energy consumption tends to promote economic growth (Shahbaz et al., 2012; Shahbaz et al., 2013; Wong et al., 2013). Since energy is an important ingredient for economic growth, strong energy policies are required to attain sustained economic growth. This result is consistent with the findings of Apergis and Payne (2010).
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Electricity Consumption and Economic Growth Nexus: Evidence from Maki Cointegration

Electricity Consumption and Economic Growth Nexus: Evidence from Maki Cointegration

The current study revisits the dynamic relationship between electricity consumption, real gross domestic product per capita and carbon dioxide emissions in Nigeria. To do this, we adopt the Zivot-Andrews (1992) unit root test to ascertain the stationarity properties of the interest variables. Maki (2012) cointegration test which accounts for multiple structural breaks is used for long-run equilibrium relationship between the variables while the long run regressions of dynamic ordinary least square (DOLS) and fully modified ordinary least square (FMOLS) for long-run coefficients as estimation techniques. The direction of causality is detected via the Toda-Yamamoto (1995) causality test for annual time series data from 1971–2014. Empirical evidence shows there exists a long-run equilibrium relationship between electricity consumption, real gross domestic product per capita and carbon dioxide emissions. The long-run regression suggests statistical significant and positive relationship between economic growth and electricity consumption. Thus, validating the electricity-induced growth hypothesis for Nigeria. According to the Toda-Yamamoto (1995) causality test, one-way causality is observed from electricity consumption to economic growth. This is in line with apriori expectation. However, there is an environmental implication of our study findings as electricity consumption spur increases carbon dioxide emissions. It is on the above premise that the study calls for diversification of Nigeria’s energy portfolio to cleaner/environmental friendly sources like renewables.
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The Electricity Consumption and Economic Growth Nexus in Pakistan: A New Evidence

The Electricity Consumption and Economic Growth Nexus in Pakistan: A New Evidence

Numerous studies have examined the causal relationship between energy 9 consumption and economic growth since 1970s. The results of these studies can be generalized in four categories. The first category includes the findings of unidirectional causality from economic growth to energy consumption. The pioneer study by Kraft and Kraft (1978) found a unidirectional causality from GNP growth to electricity consumption in the United States of America for the time period of 1947-1974. Later on Cheng and Lai (1997) examined the same relationship for Taiwan, Soytas and Sari (2002) for Italy and Korea, Ghosh (2002) for India, Oh and Lee (2004) for Korea, Yoo (2005) for Indonesia and Thailand, Mehrara (2006) for Oil Exporting Countries, Wolde-Rufael (2006) for Cameroon, Ghana, Nigeria, Senegal, Zambia and Zimbabwe, Mozumder and Marathe (2006) for Bangladesh, Zamani (2006) for Iran and Zahid Asghar (2008) for Pakistan have found the unidirectional relationship from economic growth to energy consumption. For this category, the policies for energy conservation can be implied with only little or no adverse effect on economic growth.
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The nexus between electricity consumption and economic growth in MENA countries

The nexus between electricity consumption and economic growth in MENA countries

For energy-exporting countries, there is highly important evidence in favour of neutrality hypothesis. Instead, the role of energy can be neutral vis-à-vis economic growth because the energy cost is very low relative to GDP, and thus energy consumption is not likely to have a significant impact on output growth. Hence, imposing taxes to reduce electricity consumption or implementing a conservation policy will not harm economic growth (e.g. Bildirici et al. 2012). Accordingly, Wolde-Rufael (2006) and Narayan and Smith (2009) show that the lack of causality in both directions implies that measures to save electricity usage can be taken without compromising economic growth. This can be intensely attributable to the fact that these countries have not yet reached a high level of electricity autonomy which allows them to reduce their energy use.
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Electricity Consumption and Economic Growth Nexus: A Multivariate Analysis for Turkey

Electricity Consumption and Economic Growth Nexus: A Multivariate Analysis for Turkey

According to Pesaran and Shin (1999), the SBC is generally used in preference to other criteria because it tends to define more parsimonious specifications. With the limited observations, this study used the SBC to select an appropriate lag for the ARDL model. Table no. 5 presents the estimated ARDL (1,1,0) model that has passed several diagnostic tests that indicate no evidence of serial correlation and heteroskedasticity. Besides this, the ADF unit root test for the residuals revealed that they are stationary. The bounds F–test for cointegration test yields evidence of a long-run relationship between electricity consumption per capita and real GDP per capita at 1% significance level in Turkey. The estimated log-linear long-run coefficient of the electricity consumption per capita is about 0.33 and positive. This coefficient implies the elasticity of electricity consumption and an increase in electricity consumption per capita will raise the real GDP per capita by 33%. The estimated ECT is also negative (-0.326) and statistically significant at 1% confidence level. ECT indicates that any deviation from the long-run equilibrium between variables is corrected about 33% for each period and takes about 3 periods to return the long-run equilibrium level.
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The nexus between electricity consumption and economic growth in MENA countries

The nexus between electricity consumption and economic growth in MENA countries

For energy-exporting countries, there is highly important evidence in favour of neutrality hypothesis. Instead, the role of energy can be neutral vis-à-vis economic growth because the energy cost is very low relative to GDP, and thus energy consumption is not likely to have a significant impact on output growth. Hence, imposing taxes to reduce electricity consumption or implementing a conservation policy will not harm economic growth (e.g. Bildirici et al. 2012). Accordingly, Wolde-Rufael (2006) and Narayan and Smith (2009) show that the lack of causality in both directions implies that measures to save electricity usage can be taken without compromising economic growth. This can be intensely attributable to the fact that these countries have not yet reached a high level of electricity autonomy which allows them to reduce their energy use.
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The nexus between electricity consumption and economic growth in MENA countries

The nexus between electricity consumption and economic growth in MENA countries

For energy-importing countries, there is evidence in favour of an unidirectional relationship between electricity consumption per capita and economic growth with causality running from electricity use to economic growth. This implies that restrictions on electricity consumption can threaten economic growth while increases of electricity usage can faster GDP. Thus, a policy here to reduce electricity consumption utilization will harm economic growth and can hinder economic enhancement. More precisely, a negative shock to electricity consumption leads to higher electricity prices or to electricity conservation policies which can affect negatively and significantly GDP per capita (e.g. Narayan and Singh, 2007). This suggests that good energy infrastructures may be considered as stimulus for economic growth.
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Electricity consumption and economic growth: evidence from Pakistan

Electricity consumption and economic growth: evidence from Pakistan

17 they do not attach necessary important to the role of energy which is important for economic growth and production (Stern and Cleveland, 2004). It is seen that electricity is the highest quality energy component and its share in energy consumption increases rapidly. Electricity consumption is considered as an indicator of socio-economic development along with its role in the production function. Recent rise in energy prices, shrinking existing resources, and the search for alternative sources of energy and energy conservation technologies have brought into focus the issue of causality between energy use and economic growth. Various studies have been applied to find the nature of casual relationship between energy consumption and economic growth. Energy is an important element for production and economic growth. This study analyzes the electricity consumption and its relationship with economic growth is Pakistan. Pakistan currently has been going through one of its worse electricity crisis, with a shortfall of more than 5000 MW (Economic Survey of Pakistan, 2011). The resulting power cuts in the form of load shedding, not only affects the normal life of the people of the country but it also badly damages the commerce, industry, and agriculture sectors. Which have ultimately effect on economics growth of the country. This down term of economics growth has severe consequences for unemployment and socio economics condition of the country. The electricity crisis is not a recent phenomenon in Pakistan, but this power crisis particularly is result of power policy adopted in 1994. In 1994 Power Policy of the government which has opened electricity generation to the private sector. With the induction of the private sector in power generation, the fuel mix in electricity generation has changed in favor of imported furnace oil. Until 2002, this policy worked reasonably well because the oil price in international market remained low. After 2002, the international price of fuel started rising and so did the cost of electricity generation. The cost of electricity generation, however, increased drastically in 2007-08 with an unprecedented surge in international fuel prices. In response of higher cost of electricity generation, government has been rising the price of electricity continuously for last four year. With this background, it is important for the policy makers to understand the relationship between electricity consumption and economic growth in order to design effective power policy. The general conclusion from previous studies regarding Pakistan electricity consumption and economic growth nexus is that there is no consensus on the direction of causality between electricity consumption and economic growth.
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The Nexus between Electricity Consumption and Economic Growth: New Insights from Meta Analysis

The Nexus between Electricity Consumption and Economic Growth: New Insights from Meta Analysis

Abstract: Although many factors have been identified to explain the nexus between electricity consumption and economic growth, the empirical evidence is rather mixed. Given these contradictory conclusions, we try to find out which outcome the meta analysis would support. To tackle this issue, we meta-analyze the empirical results of 43 studies between 1996 and 2013. We find that the conservation hypothesis is widely associated to American and European countries. However, conservative policies are likely to have an adverse effect on the economic growth in Asian and MENA countries. Conversely to expectations, the growth hypothesis is heavily associated to studied countries and considered modeling specifications. Additionally, while a neutrality hypothesis is insignificantly associated to MENA countries, the feedback hypothesis is not supported when appealing a panel of American economies. Therefore, the inconclusive results may be mainly due to the different country samples, econometric methodologies and to the fact that energy policies cannot be designed without considering economic and environmental factors, which are unfortunately excluded in the majority of studies. Further analysis should focus more on the new approaches rather than usual methods based on a set of common variables for different countries.
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Renewable and non renewable energy consumption and economic growth: Evidence from MENA Net Oil Exporting Countries

Renewable and non renewable energy consumption and economic growth: Evidence from MENA Net Oil Exporting Countries

A production function in economic theory shows the relationship between inputs of capital (K) and labor (L) and other technological factors (A) and the outputs of goods and services (Y). This relationship is extensively presented by the Cobb-Douglas functional form of production function, which is proposed by Cobb and Douglas (1928). Due to the biophysical approaches, including system models that give much attention to direct and indirect energy use (Giampietro et al., 2011),several economists revised the traditional growth model based exclusively on two factors of production (capital and labor) and integrated energy as an essential factor of production. Consequently, it can be directly utilized as an input (Stern 1993, 2000, 2011; Pokrovski, 2003; Ghali and El-Sakha, 2004; Thompson, 2006; Chang and Lee, 2008; Ayres et al., 2013; Shahbaz et al., 2012). Chang and Lee (2008) and Beaudreau (2005) confirm that the exclusion of the energy consumption of the production function is an unreasonable act. Additionally, Pokrovski (2003) and Shahbaz et al. (2012) supported that the production of output is determined by productive energy service, capital stock and labor. Recently, some studies have separated the energy input into renewable and non renewable energy input in an attempt to distinguish the relative impact of each input in the economic growth process and have extended The Chang and Lee(2008)production model(see Eq.(1); Payne, 2009; Apergis et al., 2010; Bowden and Payne, 2010; Apergis and Payne, 2011a, b, 2012).
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Renewable Energy Consumption-Economic Growth Nexus in G7 Countries: New Evidence from a Nonlinear ARDL Approach

Renewable Energy Consumption-Economic Growth Nexus in G7 Countries: New Evidence from a Nonlinear ARDL Approach

However, to the best of our knowledge, there exists no study which has explicitly considered the possibility of nonlinearity in the cointegration system. Therefore, we contribute to the existing literature by addressing this shortcoming and considering the combination of nonlinearities in the long-run relationship and error correction framework. In doing so, we make use of the NARDL model proposed by Shin et al. (2014) which offers a flexible tool for the analysis of joint long-run and short-run asymmetries. We argue that examining the relationship between the variables in a nonlinear setting is of immense importance. For, instance it allows to detect the hidden cointegration in time series if positive and negative components of a series are cointegrated (Granger and Yoon, 2002). Therefore, to examine the energy consumption and economic growth nexus, we apply the linear and non-linear approaches that allow testing for long-run and short-run asymmetries. However, in the presence of asymmetries, the dynamic multipliers quantify the respective responses of the renewable energy consumption to positive and negative changes in economic growth based on positive and negative partial sum decompositions.
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Economic Growth, Financial Development, Urbanization and Electricity Consumption Nexus in UAE

Economic Growth, Financial Development, Urbanization and Electricity Consumption Nexus in UAE

Kaker et al. (2011) applied production function to examine the relationship between economic growth, financial development and energy consumption using Pakistani data. They concluded that neutrality hypothesis between financial development and economic growth exists but energy consumption Granger causes financial development. Shahbaz and Lean, (2012) examined the impact of financial development on energy consumption applying energy demand function in case of Tunisia. They concluded that financial development increases energy demand by boosting stock market development and stimulating real economic activity. The results show that financial development and energy consumption Granger-cause each other. However, financial development impacts magnitude on energy consumption is greater. In case of Malaysia, Tang and Tan (2014) investigated the relationship between financial development and energy consumption by incorporating relative prices and foreign direct investment energy demand function. The empirical results reveal positive impact of economic growth, foreign direct investment and financial development on energy consumption. Feedback hypothesis is found between financial development and energy consumption, both in short and long runs. Islam et al. (2013) exposed that financial development and economic growth have positive impact on energy consumption. They found bidirectional causality between financial development and energy consumption in long run. In short run, financial development Granger causes energy consumption. Shahbaz et al. (2013) investigated the production function by incorporating financial development and energy consumption in case of China. They applied the ARDL bounds testing approach to cointegration and the VECM Granger causality to examine long run and causality relationship between the series. Their results indicated that energy consumption and financial development exert positive impact on energy consumption. They also noted that financial development is Granger cause of energy consumption. Ozturk and Acaravci (2013) examine the causal relationship between financial development, trade, economic growth, energy consumption and carbon emissions in Turkey for 1960–2007 period. The bounds F ‐ test for cointegration test yields evidence of a long-run relationship between variables. The results show that an increase in foreign trade to GDP ratio results an increase in per capita carbon emissions and financial development variable has no significant effect on per capita carbon emissions in the long- run. These results also support the validity of EKC hypothesis in the Turkish economy.
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Revisiting the Electricity Consumption Growth Nexus for Portugal: Evidence from a Multivariate Framework Analysis

Revisiting the Electricity Consumption Growth Nexus for Portugal: Evidence from a Multivariate Framework Analysis

The aim of present paper is to re-investigate the long-run and causal relationship between electricity consumption, income, financial development, population and foreign trade in Portugal using the bounds testing approach to cointegration within the unrestricted error-correction model (UECM). The Granger causality test within the Vector Error-Correction Model (VECM) was conducted to examine the direction of causality. This study covered the annual sample of 1971 to 2009. Our empirical evidence supports the presence of a long-run relationship between the variables in Portugal. Moreover, the results indicate that increase in real income, financial development, population and foreign trade has positive impact on electricity consumption in Portugal. In addition, the overall Granger causality results exhibit bi-directional causal relationship between electricity consumption, real income, and population while uni-directional causality is running from financial development to electricity consumption. In this respect, Portugal is an energy dependent country, thus energy conservation policy (growth policy) may adversely affect the economic growth (environment or pollution) in Portugal. Ultimately, the Portuguese government should encourage research and development on technological innovation for energy savings without affecting economic development in Portugal.
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Renewable and non renewable energy consumption and economic growth: Evidence from MENA Net Oil Importing Countries

Renewable and non renewable energy consumption and economic growth: Evidence from MENA Net Oil Importing Countries

All the coefficients are positive and statistically significant at the 5% significance level and since all variables are expressed in natural logarithms, the coefficients can be interpreted as elasticity estimates. The results indicate that a 1% increase in renewable energy consumption increases real GDP by 0.570%; a 1% increase in non- renewable energy consumption increases real GDP by 0.387 %; a 1% increase in real gross fixed capital formation increases real GDP by 0.517%; and a 1% increase in the labor force increases real GDP by 0.344%. Subsequently, a panel vector error correction model is estimated to perform Granger-causality tests (Pesaran et al. 1999). The two-step procedure of Engle and Granger (1987) is performed by estimating the long run model specified in Eq. (2) 15 at first in order to obtain the estimated residuals. Then, the lagged residuals from Eq. (2) are used as the error correction terms for the dynamic error correction model as follows:
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A Dynamic Causality Study between Electricity Consumption and Economic Growth for Global Panel: Evidence from 76 Countries

A Dynamic Causality Study between Electricity Consumption and Economic Growth for Global Panel: Evidence from 76 Countries

In time series econometrics most recent studies have tended to focus on VAR and VEC models and cointegration approach. For example Asafu and Adjaye (2000) investigated the causal relationship between energy use and income in four Asian countries using cointegration and error correction mechanism. They found that causality runs from energy use to income in India and Indonesia and bi-directional causality in Thailand and Philippines. Yang (2000), found bi-directional causality between energy consumption and GDP in Taiwan and this results contradicts with Cheng and Lai (1997) results. Soytas and Sari (2003) found bidirectional causality in Argentina and unidirectional causality from GDP to energy consumption in Italy and South Korea, and from energy consumption to GDP in Turkey, France, Germany and Japan. Paul and Bhattacharya (2004) found bidirectional causality between energy consumption and economic growth in India. Using cointegration analysis Wietze and and Van (2007) found that unidirectional causality from GDP to energy consumption in Turkey. Dirck (2008) used the cointegartion approach to study the causal relationship between electricity consumption and economic growth for the panel of 15 European countries. He found the unidirectional causality from electricity consumption to economic growth for Greece, Italy, and Belgium, and from economic growth to electricity consumption for Great Britain, Ireland, Netherland, Spain and Portugal, no causality is found in Austria, Germany, Denmark, Finland, France, Luxembourg, and Switzerland. Narayan, Narayan and Popp (2010) used the cointegartion approach to study the causal relationship between electricity consumption and economic growth for six different panels of 93 countries. They found bidirectional causality relationship between
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An Investigation of the Impact of Government Size on Economic Growth: New Evidence from Selected MENA Countries

An Investigation of the Impact of Government Size on Economic Growth: New Evidence from Selected MENA Countries

This paper studies the effect of various threshold variables on the government size and growth nexus. Using a Panel Smooth Threshold Regression model, this research investigates the non-linearity between government size and economic growth. Our main results can be summed up as follows: first, there is a non-linear relationship between government size and economic growth. Moreover, the results indicate that the intensity of positive impact of labor force on growth has increased when the level of government consumption size is high. On the other hand,the investment has positive impact on economic growth when the level of government consumption size is low. On the one hand, export revenues in MENA countries have no positive effect on economic growth when the level of government consumption is large. The main result of this study is referring to negative impact of consumption expenditure on economic growth. Hence, MENA countries can enhance their economic growth and reduce their domestic financial imbalances by decreasing their budget deficits and reforming their financial sectors.
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A Review of the Nexus Between Energy consumption and Economic growth in the Brics countries

A Review of the Nexus Between Energy consumption and Economic growth in the Brics countries

Tagcu, Ozturk and Aslan (2012) undertook a multi-country study to examine the causal relationship between renewable and non-renewable energy consumption and economic growth. A sample of the group of seven (G7) countries was taken for the period 1980 to 2009. The autoregressive distributed lag model for co-integration showed no evidence of a long term relationship between either renewable or non-renewable energy consumption and economic growth. Granger-causality between these variables was tested by using a causality test developed by Hatemi-J (2012) and the results supported a bidirectional relationship between the variables for all the countries. Different results were established when the study examined countries individually. For example, neutral hypothesis was found for France, Italy, Canada and the United States of America, whilst feedback hypothesis was supported for England and Japan and in Germany a conservation hypothesis was found.
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The nexus among foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region

The nexus among foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region

openness through export and import transactions has succeeded in supporting economic growth. What is not expected, however, is that the effect of financial development on economic growth is statistically insignificant. Finally, the effect of government expenditure on economic growth in MENA region is negative and statistically insignificant. This is due to the incapacity of the governments to control the funds use. This is the case of most of the developing countries which suffer from a high-level corruption and misallocation of resources. From these results, it is clear that the governments of the MENA region should orient their economic policies to changes and promote the government expenditure, the stock of human capital and inflation targeting.
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The nexus between foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region

The nexus between foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region

Kadhraoui, 2012). This means that trade openness through export and import transactions has succeeded in supporting economic growth. What is not expected, however, is the effect of financial development on economic growth is statistically insignificant. Finally, the effect of government expenditure on economic growth in MENA region is negative and statistically insignificant. This is due to the incapacity of the governments to control the funds use. This is the case of most of the developing countries which are suffering from a high-level corruption and misallocation of resources. From these results, it is clear that the governments of the MENA region should orient their economic policies to changes and promotes the government expenditure, the stock of human capital and inflation targeting.
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