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Energy consumption and economic growth in Ethiopia: A dynamic causal linkage

Sheilla Nyasha, Yvonne Gwenhure and Nicholas Odhiambo ()

No 20288, Working Papers from University of South Africa, Department of Economics

Abstract: In this study, we have explored the causal relationship between energy consumption andeconomic growth in Ethiopia, during the period from 1971 to 2013. We have employed amultivariate Granger-causality framework that incorporates financial development,investment and trade openness as intermittent variables ? in an effort to address theomission-of-variable bias. Based on the newly developed ARDL bounds testing approach toco-integration and the Error-Correction Model-based causality model, our results show thatin Ethiopia, there is a distinct unidirectional Granger-causality from economic growth toenergy consumption. These results apply, irrespective of whether the estimation is done in theshort run or in the long run. We recommend that policy makers in Ethiopia should considerexpanding their energy-mix options, in order to cope with the future demand arising from anincrease in the real sector growth.

Keywords: Ethiopia; Energy Consumption; Economic Growth; Granger-Causality (search for similar items in EconPapers)
Date: 2016-05
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Journal Article: Energy consumption and economic growth in Ethiopia: A dynamic causal linkage (2018) Downloads
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