The semi-elasticities were calculated by adding the coefficients of variables in the first differences. Moreover, the elasticities are calculated by dividing the coefficient of lagged independent variable by the coefficient of the lagged independent variable, multiplier by (-1). The results of model I, show that in the short-run elasticities of hydroelectricityconsumption exerts a positive impact, where the increase of 1% on hydroelectricityconsumption increase the GDP in 0.0396, and long-run elasticities has a negative impact of -0.2615. The Oil consumption has a positive influence in short-run of 0.1134, and in long-run has a negative influence of -0.8520 in GDP, and CO 2 emissions increase the GDP in short-and long-run. For the model II, the short-run elasticities of GDP exert a positive impact, where the increase of 1% of GDP, increase the hydroelectricityconsumption in 0.4870, and in long-run elasticities, the GDP does not cause an impact on energy consumption. The Oil consumption does not have an influence on energy consumption in short-and long-run. Finally, the CO 2 reduction the energy consumption in -0.6474 in short-run. In the model, I and II were applied a battery of specification tests to back up the parameters statistical significance of the DFE model. The Modified Wald test, points to the presence of heteroscedasticity. The Pesaran test of cross-section independence, indicate the contemporaneous correlation between the crosses in the model, except in the model II. The Wooldridge test points to the presence of the first-order autocorrelation. The Breusch-Pagan LM test, evidence the presence of cross-section independence in the model I. The Doornik-Hansen test, suggest that the underlying population is normal, and the Ramsey RESET test evidence that in two models no have omitted variables.
In addition to the Johansen cointegration rank test, we also performed an ARDL model for bound test introduced by the Pesaran et al., (2001). Although Gonzalo (1994) presents Monte Carlo evidence that the full information maximum likelihood procedure of Johansen test performs better than others and the test is appropriate when the identification of exogenous variable is not possible at prior, but the Johansen test result is very sensitive in the case of small sample and the use of different lag length (Odhiaambo, 2009). ARDL bound test has many advantages over other cointegration tests in this regards. The ARDL does not impose any restriction that all the variables used under study must be integrated of the same order; therefore the test can be applied whether the selected variables are integrated of order zero or order one. The test is also not sensitive to the size of the sample. Moreover, the ARDL test generally provides unbiased estimates of the long run model and provides valid t-statistics even when some of the regressors are endogenous (Harris and Sollis, 2003). Pesaran and Shin (1998) show that it is possible to test the long run relationship between the dependent and the set of regressors when it is not known a prior whether the variables are stationary or non-stationary. Following Pesaran and Shin we have estimated the following equations to investigate the long run level relationships which are as follows
Sari et al. (2008) employed Johansen and Juselius (1990) approach to identify cointegration relationship between natural gas consumption and economicgrowth. This cointegration approach is considered more powerful than the Engle and Granger (1987) test for a country specific analysis. Taking monthly data for the period of 2001:1-2005:6, Sari et al. (2008) applied the ARDL bounds testing approach which can detect cointegration even for small samples. Their findings reveal no significant impact of industrial production on natural gas consumption in long run. Reynolds and Kolodziej (2008) conducted a study on the former Soviet Union to explore cointegration, and use Engle and Granger (1987) causality test. They found no causal relationship between natural gas consumption and economicgrowth mainly because Soviet Union has stable level of natural gas consumption due to low variable costs of production. Hu and Lin (2008) also conducted a study on Taiwan using shorter period of quarterly data: 1982:1- 2006:4. They also considered a structural break in the analysis, and use threshold vector-error correction model with two regimes. Their findings confirmed that, with faster adjustments of natural gas consumption than GDP, long-run equilibrium exists. Amadeh et al. (2009) applied Johansen cointegration approach and reported that variables are cointegrated for long run and causality analysis reveals that economicgrowth Granger causes natural gas consumption over the period of 1973-2003.
It may be noted that presence of structural break in the time series makes long run relations prejudiced, less powerful and unreliable. To overcome this deficiency of ARDL bounds testing approach to cointegration, we have applied Gregory-Hansen (1996) structural break cointegration test to examine the robustness of long run relationship between electricity consumption, financial development, capital, labour and economicgrowth. The Gregory-Hansen cointegration test is powerful over residual based cointegration tests and allows the presence of one structural break in the series. The results are reported in Table-5. The results show that cointegration relationship exists between electricity consumption, financial development, capital, labour and economicgrowth after allowing structural break in 1990 was investigated by applying FMOLS (fully modified ordinary least square) approach. This approach indicated the statistical significance of dummy variable for structural break in the financial development series 17 . The break point in financial development series is due to implementation of financial reforms in financial sector of Pakistan. The empirical evidence indicated that there is cointegration relationship between the variables as electricity consumption, economicgrowth, capital and labor are used as forcing variables including dummy variable. This implies that long run relationship exists between the variable and long run results are robust.
GDP in Ghana during 1970-2014 based on the Cobb-Douglas growth model. Unit root testing was conducted to depict the stationarity status of the data and the data series are non-stationary at level, hence necessitating the incorporation of first differencing. The time series data for the variables were found to be stationary at first differencing. The study found the existence of long-run equilibrium co-integration among output, labor, capital and electricity consumption. The VECM shows a likelihood of a long-run con- vergence with high speed of error correction. The Granger causality test indicates that there exists Granger causality running from GDP to electricity consumption implying that the conservation hypothesis is appropriate for the Ghanaian data. The policy im- plication is that electricity consumption is not a limiting factor to economicgrowth of Ghana. In other words, electricity consumption has no adverse impact on economicgrowth. Therefore, electricity conservation policy is favorable for the Ghanaian econo- my.
Our findings suggest that there is unidirectional Granger causality running from electricity consumption to economicgrowth in short-run, while there is bidirectional causality in long-run. The different Granger causality results between short and long-run imply the need for different policies for short run and long run. As short-run causality results show that electricity consumption Granger- causes economicgrowth, which mean that UAE is energy-led growth economy (Sweidan, 2012). Consequently, environmental friendly policies such as electricity conservation, including efficiency improvement measures and demand-side management policies, which target to decrease the wastage of electricity, would stimulate economic activity in short-run. Further, our empirical results also reveal that electricity consumption and economicgrowth have bi-directional causality in long-run. Especially, as explained above, UAE became a net importer of natural gas because the big jump of electricity production needs. Moreover, UAE should increase investment in energy infrastructure to ensure that the supply of energy is sufficient and support research and development (R&D) to design new energy savings technology. Therefore, electricity consumption can be reduced without affecting economicgrowth and development in the UAE economy. Our analysis indicated the threshold point i.e. Dirham 190535 UAE between electricity consumption and economicgrowth that must be used as policy tool to lower electricity demand.
From the meta-regression analysis, the following main results are obtained and are useful either for the researcher as well as for policy makers. The direction of causality between renewable energy consumption and economicgrowth significantly differs across the short- and long-run. That is, for decision-makers, policy instruments to be implemented in the short- run may be inadequate in the long-run. Grouping developed and developing countries within a single study may not provide accurate conclusions and therefore leads to distortions in delivering policy recommendations. The comprehensive analysis shows also the role of model specification and data characteristics in the final outcome of empirical studies. Particularly, using bivariate versus multivariate models, aggregate versus per capita data and time series versus panel data has significant influence on the supported hypothesis. Further, the growing widely used procedure of controlling for the structural break in the data appears to significantly affect the causality direction between renewable energy and economicgrowth. Finally, and most importantly, estimation techniques, resided in the cointegration methods and causality tests, confirm its significant influence on the causality nexus. This confirms the previous statements that methodological variations still among the key factors explaining the controversial outcomes in the causal relationship between energy consumption and economicgrowth [1, 89, 90].
Studies concerning African countries are relatively limited and again provide mixed evidences. Fosu (1990) studied the impact of exports on economicgrowth in 28 African countries using an augmented production function including labor, capital formation, and exports. Using a pooled cross-sectional time series estimation of 1960-1970 and 1970-1980 average annual growth rates, he found that exports exert a positive impact on economicgrowth. Ahmed and Kwan (1991) found support for the growth-led export hypothesis but not for the export-led growth hypothesis in a study of 47 African countries over the period 1981-1987. In a study of Nigeria, Ekpo and Egwaikhide (1994) provided support for the export-led growth hypothesis. Ukpolo (1994) found a positive relationship between the growth of non-fuel primary exports and economicgrowth for a sample of low-income African countries. Abdulai and Jaquet (2002) studied the relationship between exports and economicgrowth in Cote d’Ivoire for the period 1961-1997. While controlling for investment and labor force, they found evidence supporting the export-led growth hypothesis both in the short and long run. Reppas and Christopoulos (2005) used fully modified OLS techniques to address the export-growthnexus for a sample of 22 African and Asian countries over the period 1968-1999. They found evidence supporting the growth-led export and not the export-led growth hypothesis for 12 countries (Cote d’Ivoire, Gabon, Mauritius, South Africa, India, Korea, Malaysia, Nepal, Pakistan, Singapore, Sri Lanka and Thailand). For the other countries of the sample, there is no significant relationship between exports and output. Foster (2006) employed threshold regression techniques to examine the relationship between exports and per capita income growth in a sample of 43 African countries
The next step of the analysis consists of estimating the long-run and short-run coefficients associated with the ARDL (1, 0, 0, 4) model by equations (3) and (4). Estimated long-run and short-run coefficients of the model and associated standard errors, T-statistics, and probabilities are presented in Table 4. Starting with the long-run coefficients, the results indicate that the economicgrowth has significant effect on coal consumption in the long-run with an estimated long-run elasticity of 1.436. However, technological innovation has a negative impact on coal consumption with estimated long-run elasticity of -0.349. This result indicates that an increase in technological innovation has an important role in decreasing coal consumption, and it might lead an increase in renewable energy consumption in Turkey. Regarding energy prices, associated coefficient is negative and insignificant in the long- run. The share of coal consumption in total energy consumption is about 11% during the study period and this might help to explain the unusual energy price- coal demand association in Turkey.
This study reports that growth in the country stimulates the demand for energy that affects the energy prices. The results are helpful to the policy makers to understand the association among energy consumption, energy prices and economicgrowth then formulate esteemed policies about the energy sector of Pakistan. As economicgrowth Granger causes energy consumption, it recommends energy conservation policies should be adopted. The policy may have negligible or no adverse ef- fects on the growth of the country. This policy is also helpful to control the energy prices and hence inflation, to rescue the economy from adverse price shocks. Although, Pakistan is facing serious energy crisis but still there are some policy implications are available to conserve the energy. For example, energy can be conserved by advancing the standard clock by an hour in summer, imposing the time limits in markets in shopping centers and by restricting the night working shift in industries. Although, this study is conducted to bridge up the gap in the previous researches by consi- dering a trivariate model to overcome bivariate biasness and by considering energy prices, an impor- tant variable for energy-growthnexus, still there are some weaknesses. Some important variables and determinants of energy-growthnexus like capital, labour, trade openness, foreign direct invest- ment etc. are still neglected. Also, energy consumption is not disaggregate levels; like effect of oil consumption on GDP, effect of coal consumption on GDP, effect of natural gas consumption on GDP, effect of electricity consumption on GDP and relationship between renewable energy and GDP is also not considered in this study.
This paper examines the relationship between financial development, economicgrowth and energy consumption in Cote d’Ivoire over the period 1971-2011. To do so, the study first built a synthetic indicator of financial development through the Principal Component Analysis technique (PCA) and used four energy sources such as electric power consumption, electricity production from renewable sources, electricity production from oil sources and electricity production from hydroelectric sources. Then, employing the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration, we find that there is a long run relationship between financial development, economicgrowth and energy consumption sources. Furthermore, the results of the Vector Error Correction Models (VECM) reveal unidirectional causality running from financial development to energy consumption sources, bidirectional causality between economicgrowth and energy consumption and unidirectional causality from financial development to economicgrowth in the long run. The mixed results are due to the use of different proxies for energy consumption. Accordingly, this paper recommends that policy makers should solicit the support of financial sector in order to solve energy problems and further the diversification of the energy consumption sources since financial development has a positive effect on energy consumption in long run. Moreover, government should develop public-private partnership (PPP) to stimulate economicgrowth, as well as to improve the access to energy and maintain a sustainable development in Cote d’Ivoire.
In spite of Nigeria’s recent ranking as one of the fastest growing economies in world, it is paradoxical that the rapid growth has not impacted on the welfare of the citizens and residents as poverty incidence has persistently been on the rise. Bank credit has been widely recognized as a veritable means of lifting people out of the abyss of poverty. This study was designed to appraise the bank credit, economicgrowthnexus in Nigeria, using annual time series data from 1970 to 2011. The paper specifically attempts to determine the flow of causality between private sector credit and economicgrowth. The research employed unit root, and granger causality tests. The study revealed that there exist a unilateral flow of causality which runs from bank credit to economicgrowth at 5% level of significance both in the short and long run. The paper therefore recommends that the Central Bank of Nigeria should prescribe and enforce rules on sectoral allocation of credit between the private and public sectors with a tilt towards the former, leverage credit disbursement as a tool for driving economicgrowth, and ensure that credit growth does not compromise credit quality.
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 economicgrowth 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 economicgrowth. 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.
This Paper inquiries into analysis of the nexus between environmental quality and economicgrowth for the period 1990-2018. In an attempt to realize the major objectives of the study various researcher’s’ works on relevant studies were exhaustively reviewed. The study utilizes annual time series data for its analysis and data on Carbon emissions metric tons per capita, GDP, Energy use and Access to electricity as a percentage of total population were collected for the period under review. Autoregressive distributed lag (ARDL) model approach was applied to estimate long run and short run relationship among the aforementioned variables. Both the short run and long run levels result fairly distinct with each other that GDP is positively and
Human capital investment has been seen as an impetus to sustainable economicgrowth and this has necessitated the increase in government spending by major economies including Nigeria in order to achieve a steady long-run growth path. On this basis, the effect of human capital investment on economicgrowth in Nigeria between a decade after independence 1970 and 2009 is examined based on the endogenous growth theory framework. Following the underlying assumptions of the endogenous growth model, real output is regressed on private capital investment, government human capital investment, human capital consumption, and openness to trade. The time series of the variables were examined using the Augmented Dickey-Fuller unit root test and all of the series were found non-stationary at levels excluding population growth of economic active. Engle-Granger co- integration test result revealed that there is long-run growth path between human capital investment and economicgrowth in Nigeria. However, the result of the co integrating regression indicated that capital investment from the private and public sector, and human capital consumption tends to be important factors that enhance real economicgrowth in Nigeria, while, growth of economic active population and economic openness exert negative influence on economicgrowth in Nigeria.
Second generation studies accounted for non-stationarity in the data and performed co-integration analysis to investigate the long-run relationship between energy consumption and growth. This second generation literature, based on the Engle and Granger (1987) two-step procedure, studied pairs of variables to check for co-integration relationships and used estimated error- correction models to test for Granger causality (Nachane et al., 1988; Cheng & Lai, 1997; Glasure & Lee, 1998). Third generation studies used multivariate estimators based on the style of Johansen (1991). Johansen’s multi-variate approach also allows for more than two variables in the cointegration relationship (Masih & Masih, 1997; Stern, 2000; Asafu- Adjaye, 2000; Soytas & Sari, 2003; Oh & Lee, 2004). Finally, fourth generation studies employ recently developed panel-econometric methods to test for unit roots and co-integration relations. This literature estimates panel- based error-correction models to perform Granger causality tests (Lee, 2005; Al-Iriani, 2006; Mahadevan & Asafu-Adjaye, 2007; Lee & Chang, 2007, 2008; Apergis & Payne, 2009; Lee & Lee, 2010; Costantini & Martini, 2010).
In contrast to aggregate energy consumption, there have been few studies specifically addressing the causal relationship between nuclear energy consumption and economicgrowth (Yoo and Ku, 2009). Some of them employ panel data models while others apply time series analysis. For instance, Naser (2014) examines the relationship between oil consumption, nuclear energy consumption and economicgrowth in four emerging economies (Russia, China, South Korea, and India) by using Granger non-causality and Toda-Yamamoto tests over the period from 1965 to 2010. The results propose that nuclear energy stimulates economicgrowth in both South Korea and India. In another panel data analysis, Chu and Chang (2012) searched whether energy consumption promotes economicgrowth by using specifically oil and nuclear energy consumption data for G-6 countries over the period of 1971-2010. The results indicate that nuclear energy consumption causes economicgrowth in Japan, UK, and the US; economicgrowth causes nuclear energy consumption in the US; nuclear consumption and economicgrowth have no causal relation in Canada, France and Germany.
This study examines the link between government spending and economicgrowth in Nigeria over the last three decades (1977-2006) using time series data to analyze the Ram (1986) model. Three variants of Ram (1986) model were developed-regressing Real GDP on Private investment, Human capital investment, Government investment and Consumption spending at absolute levels, regressing it as a share of real output and regressing the growth rate real output to the explanatory variable as share of real GDP, in other to capture the precise link between public investment spending and economicgrowth in Nigeria based on different levels. Empirical result showed that private and public investments have insignificant effect on economicgrowth during the period under review. The paper test for presence of stationary using Augmented Dickey Fuller (ADF) unit root test result reveals that all variables incorporated in the model were non-stationary at their levels. In an attempt to establish long-run relationship between public expenditure and economicgrowth, the result reveals that the variables are cointegrated at 5% and 10% critical level. With the use of error correction model to detect short run behaviour of the variables, the result shows that for any distortion in the short-run, the error term restore the relationship back to its original equilibrium by a unit. The paper main policy recommendation was that government spending should be channel in order to influence economicgrowth significantly and positively in Nigeria especially on education and infrastructural facilities.
Energy is critical to the survival and expansion of any economy. In Nigeria, energy consumption has been skewed towards household use, and below thresholds for sector-driven growth. The article updates, in time and methodology, those studies highlighting the significance of energy use for economicgrowth, using the Bound test and the Auto Regression Distributed Lag (ARDL) to establish the long- and short-run relationships between disaggregated energy consumption and economicgrowth in Nigeria from 1990 to 2016. The variables considered are real GDP, energy consumption decomposed into electricity and petroleum consumption, labour and capital. The findings show that, in the short and long run, petroleum consumption and labour have a significant positive relationship with GDP. Furthermore, the causality results show that feedback causation between economicgrowth and energy consumption as well as labour exists, while one-way causation runs from labour to economicgrowth. The study recommends diversification of the power-generation portfolio in the country, as this will improve energy consumption. Also, full deregulating policies in the energy sector would encourage industrialization and move energy demand towards increasingly productive uses. Finally, a strong institutional framework is needed to ensure energy policies achieve their objectives and targets.
growth hypothesis, which clearly indicates the unidirectional Granger causality running from energy consumption to economicgrowth, suggests that a country may pursue any energy conservation policy for reducing environmental pollution that will adversely affect the pace of economicgrowth. In this sense, it is suggested in the literature that energy reduction policy for the sake of reducing environmental pollution should be discouraged and new sources of less consuming and lower polluting energy must be explored in order to increase the pace of economicgrowth; iii) If Granger causality running from economicgrowth to energy consumption claims the existence of a conservation hypothesis, it indicates that any adoption of energy conservation policy for reducing environmental pollution would not have an adverse impact on economicgrowth because economicgrowth of a country is not associated with energy consumption; and iv) The feedback hypothesis exists based on the existence of bidirectional causality between energy consumption and economicgrowth, which argues that a rise in economicgrowth leads to a rise in demand for energy and therefore using energy stimulates output in the economy. Accordingly, a country’s pursuit of energy conservation policy to reduce environmental pollution will have a detrimental effect on economicgrowth. In such a situation, it is also suggested that adoption of updated technology and people awareness would be one of the instruments through which usage of an energy reduction policy could be possible without undermining the pace of economicgrowth and development in an economy.