Electricity consumption, economic growth, urbanisation and trade nexus: empirical evidence from Iceland

Faisal Faisal, Turgut Türsoy, Nil Gunsel Resatoglu and Niyazi Berk

Economic Research-Ekonomska Istraživanja, 2018, vol. 31, issue 1, 664-680

Abstract: This study empirically investigates the relationship between economic growth, electricity consumption, trade and urbanisation in Iceland, covering the period 1965–2013. The A.R.D.L. bounds testing approach to co-integration is applied to investigate the existence of the long-run relationship. The causality was investigated among the variables using Granger causality under the V.E.C.M. framework. The A.R.D.L. bounds testing approach to co-integration confirms a long-run relationship between electricity consumption and its regressors. The empirical estimation indicates the existence of a positive and statistically significant impact of economic growth, trade and urbanisation on electricity consumption for Iceland, not only in the long-run, but also in the short-run. Furthermore, electricity consumption converges to its long-run position by 45.63% speed of adjustment using the channels of urbanisation, trade and economic growth. The results of Granger causality imply the presence of a feedback causal relationship between urbanisation and electricity consumption in the long-run, thus validating the feedback hypothesis. However, economic growth is causing trade, thus validating the growth-led trade hypothesis in the short-run. Additionally, no causal relationship was found between electricity usage and economic growth, which confirms the neutrality hypothesis. Implementing the energy conservation policy will have no damaging effect on economic growth for Iceland.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1080/1331677X.2018.1438907 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:reroxx:v:31:y:2018:i:1:p:664-680

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rero20

DOI: 10.1080/1331677X.2018.1438907

Access Statistics for this article

Economic Research-Ekonomska Istraživanja is currently edited by Marinko Skare

More articles in Economic Research-Ekonomska Istraživanja from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().