Electricity consumption and economic growth nexus in Portugal using cointegration and causality approaches

Muhammad Shahbaz, Chor Foon Tang and Shahbaz Shabbir ()
Authors registered in the RePEc Author Service: Muhammad Shahbaz

Energy Policy, 2011, vol. 39, issue 6, 3529-3536

Abstract: The aim of this paper is to re-examine the relationship between electricity consumption, economic growth, and employment in Portugal using the cointegration and Granger causality frameworks. This study covers the sample period from 1971 to 2009. We examine the presence of a long-run equilibrium relationship using the bounds testing approach to cointegration within the Unrestricted Error-Correction Model (UECM). Moreover, we examine the direction of causality between electricity consumption, economic growth, and employment in Portugal using the Granger causality test within the Vector Error-Correction Model (VECM). As a summary of the empirical findings, we find that electricity consumption, economic growth, and employment in Portugal are cointegrated and there is bi-directional Granger causality between the three variables in the long-run. With the exception of the Granger causality between electricity consumption and economic growth, the rest of the variables are also bi-directional Granger causality in the short-run. Furthermore, we find that there is unidirectional Granger causality running from economic growth to electricity consumption, but no evidence of reversal causality.

Keywords: Cointegration; Causality; Electricity-growth; nexus (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (152)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:39:y:2011:i:6:p:3529-3536

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