ELECTRICITY CONSUMPTION & ECONOMIC GROWTH IN BANGLADESH: EVIDENCE FROM TIME-SERIES CAUSALITY APPROACH

Arifuzzaman Khan (), Sandip Sarker and Delowar Hossain ()

Romanian Economic Business Review, 2016, vol. 11, issue 2, 19-28

Abstract: This paper attempts to identify the relationship between electricity consumption and economic growth in Bangladesh through co-integration and vector error correction model (VECM) over the period 1982 to 2012. The Johansen co-integration test indicates that there exists a long run association between the variables. The VECM long run causality model indicates that there is a long run causality running from electricity consumption to economic growth in Bangladesh. Similarly in the short run a causal relationship has also been found between the variables as well. Further variance decomposition results say that electricity consumption can explain the major variations in economic growth in Bangladesh. The implication of our findings is that in Bangladesh the increase of electricity consumption is likely to increase our economic growth in the long run. Policymakers in Bangladesh need to pay special attention to utilize our electricity consumption as well as identifying the alternative sources of electricity generation in order to boost our economic growth

Keywords: Electricity consumption; growth; Bangladesh; cointegration; economy; causality. (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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