Causal Interaction among Electricity Consumption, Financial Development, Exports and Economic Growth in Jordan: Dynamic Simultaneous Equation Models

Ali Matar and Hussain Ali Bekhet
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Ali Matar: Department of Financial Science and Banking, Jadara University, Irbid, P.O. 733, Postal Code 21110, Jordan
Hussain Ali Bekhet: Graduate Business School, College of Graduate Studies, Universiti Tenaga Nasional (UNITEN), Malaysia.

International Journal of Energy Economics and Policy, 2015, vol. 5, issue 4, 955-967

Abstract: The goal of this paper is to examine the empirical dynamic relationship among the electrical consumption (ELC) and economic growth (proxies by gross domestic product [GDP] per capita), export, and financial development (domestic credit to the private sector as a percentage of GDP) in Jordan over the 1976-2011 period. Annual time series data and the autoregressive distributed lag model are used. The augmented Dickey Fuller, F-bound testing, Granger causality, GIRF, and cumulative sum of recursive residuals, cumulative sum of squares tests were applied to test the stationary, cointegration, causality and stability, respectively, among the variables. There is evidence of a long-term equilibrium relationship between electricity consumption and the economic growth, and a unidirectional relationship runs from real GDP to ELC. This is indicating that per capita increase in economic growth may cause a perpetual rise in the ELC in Jordan.

Keywords: Electricity Consumption; Economic Growth; Co-integration; Autoregressive Distributed Lag; Causality; Jordan (search for similar items in EconPapers)
JEL-codes: C32 O13 O20 Q43 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (13)

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