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Residential Electricity Consumption and Economic Growth in Algeria

Mohammed Bouznit (), María P. Pablo-Romero () and Antonio Sánchez-Braza ()
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Mohammed Bouznit: Laboratoire d’Économie et Développement, Faculté des Sciences Economiques, Commerciales et des Sciences de Gestion, Université de Bejaia, Bejaia 06000, Algeria
María P. Pablo-Romero: Department of Economic Analysis and Political Economy, Faculty of Economics and Business Sciences, University of Seville, Ramón y Cajal 1, 41018 Seville, Spain
Antonio Sánchez-Braza: Department of Economic Analysis and Political Economy, Faculty of Economics and Business Sciences, University of Seville, Ramón y Cajal 1, 41018 Seville, Spain

Energies, 2018, vol. 11, issue 7, 1-18

Abstract: Within the framework of the COP21 (Conference of the Parties) agreement, Algeria submitted its Intended Nationally Determined Contribution pledging to reduce carbon emissions by at least 7% by 2030. However, it will be a difficult task to reach this target as total final energy consumption has increased 32% from 2010 to 2014, with the major energy increases being related to electricity use in the residential sector. In this context, the relationship between residential electricity consumption and income is analyzed for Algeria in the period 1970–2013, by estimating a residential electricity consumption per capita demand function which depends on GDP per capita, its squared and cubed terms, the electricity prices, and the goods and services imports. An extended Autoregressive Distributed Lag model (ARDL) was adopted to consider the different growth patterns registered in the evolution of GDP. The estimate results show that the relationships between electricity use and GDP (in per capita terms) present an inverted N-shape, with the second turning point having been reached. Therefore, promoting growth in Algeria could be convenient to reduce the electricity consumption, as a higher income level may allow the use of more efficient appliances. Additionally, renewable energies may be adequate to increase the electricity production in order to cover the increasing residential demand.

Keywords: economic growth; residential electricity consumption; ARDL model; Algeria (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
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