Economic Growth and Electricity Consumption in 12 European Countries: A Causality Analysis Using Panel Data

Aitor Ciarreta Antuñano () and Ainhoa Zarraga

BILTOKI from Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística)

Abstract: We apply recent panel methodology to investigate the relationship between electricity consumption and real GDP for a set of 12 European Union countries using annual data for the period 1970-2004. Recently developed tests for panel unit roots, cointegration in heterogeneous panels and panel causality are employed. The results show a long-run relationship between the series. We estimate this relationship and test for causality. We find no short-run causality in any direction. These results might help to design appropriate electricity consumption policies in the sample countries, as well as investment policies in interconnections to build a single European market for electricity.

Keywords: Electricity consumption; economic growth; panel cointegration; panel causality (search for similar items in EconPapers)
JEL-codes: C33 Q40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-ene
Date: 2008-11-05
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Persistent link: http://EconPapers.repec.org/RePEc:ehu:biltok:200804

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Dpto. de Econometría y Estadística, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain

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