Energy Consumption and Economic Growth in Nigeria: Correlation or Causality?

Bernard O. Muse

Journal of Empirical Economics, 2014, vol. 3, issue 3, 108-120

Abstract: This study examined the causal relationship between economic growth and energy consumption in Nigeria during period 1980-2012 and employed the co-integration test, OLS analysis, error correction model and pairwise granger causality test techniques. The cointegration test result revealed that there was a long run relationship among our variable of interest. The study found that electricity is an important factor in economic growth in Nigeria. The result is thus an indication that energy consumption enhances economic growth enormously. Furthermore, the result from causality test shows that there is a bi-directional casual relationship between total energy consumption and economic growth in long run. The policy implication of this finding was that the policy maker need improve the power sector so as to harness the potential of electricity in growing the economy.

Date: 2014
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