Electricity consumption and economic growth: a time series experience for 17 African countries

While the availability of electricity by itself is not a panacea for the economic and social problems facing Africa, the supply of electricity is nevertheless believed to be a necessary requirement for Africa's economic and social development. This paper tests the long-run and causal relationship between electricity consumption per capita and real gross domestic product (GDP) per capita for 17 African countries for the period 1971–2001 using a newly developed cointegration test proposed by Pesaran et al. (2001) and using a modified version of the Granger causality test due to Toda and Yamamoto (1995). The advantage of using these two approaches is that they both avoid the pre-testing bias associated with conventional unit root and cointegration tests. The empirical evidence shows that there was a long-run relationship between electricity consumption per capita and real GDP per capita for only 9 countries and Granger causality for only 12 countries. For 6 countries there was a positive uni-directional causality running from real GDP per capita to electricity consumption per capita; an opposite causality for 3 countries and bi-directional causality for the remaining 3 countries. The result should, however, be interpreted with care as electricity consumption accounts for less than 4% of total energy consumption in Africa and only grid-supplied electricity is taken into account.     

The relationship between energy demand and real GDP growth rate: The role of price asymmetries and spatial externalities within 34 countries across the globe

The aim of this paper is to empirically explore the relationship between energy demand and real Gross Domestic Product (GDP) growth and to investigate the role of regional externalities on per capita Final Energy Consumption (FEC) in 34 countries during the period from 2005 to 2013. The paper utilizes a Dynamic Panel Generalized Method of Moments (DPGGM) approach and spatial econometric techniques in order to analyse the effect of real GDP growth rate on FEC through an Error Correction Model (ECM) and to examine clustered patterns of energy consumption. The results show that a) the demand is elastic both in the industrial and the household/services sectors, b) electricity and natural gas are demand substitutes, c) the relationship between real GDP growth rate and per capita energy consumption exhibits an inverted U-shape for all the sample countries under scrutiny (34 countries, Eurozone and EU28), but not for all the employed sectors of the economy, d) price (electricity and gas) and GDP growth asymmetries are supported from the employed parametric tests, and, e) distance does not affect per capita FEC, but economic neighbours have a strong positive effect.     

Electricity supply,employment and real GDP in India: evidence from cointegration and Granger-causality tests

This study probes nexus between electricity supply, employment and real GDP for India within a multivariate framework using autoregressive distributed lag (ARDL) bounds testing approach of cointegration. Long-run equilibrium relationship has been established among these variables for the time span 1970–71 to 2005–06. The study further establishes long- and short-run Granger causality running from real GDP and electricity supply to employment without any feedback effect. Thus, growth in real GDP and electricity supply are responsible for the high level of employment in India. The absence of causality running from electricity supply to real GDP implies that electricity demand and supply side measures can be adopted to reduce the wastage of electricity, which would not affect future economic growth of India.     

The relationship between CO2 emissions,energy consumption and economic growth in Italy

This study examines the relationship between CO₂ emissions, energy consumption and economic growth in Italy over the period 1970–2006. Results of unit root tests show that all variables are non-stationary in their level form, but stationary in first differences form. The causal relationship between variables is examined using causality test in a vector autoregressive framework. Our empirical results show that CO₂ emissions, energy consumption and economic growth are not cointegrated. Moreover, the Toda and Yamamoto Granger non-causality test shows a bidirectional causality between CO₂ emissions and economic growth, as well as between CO₂ emissions and energy consumption. Forecast error variance decompositions evidence that the errors in real per capita GDP are mainly due to uncertainty in GDP itself, while the errors in predicting the energy consumption and the CO₂ emissions are sensitive to disturbances in the other two equations.     

Causality relationship between electricity consumption and GDP in Bangladesh

In this paper, we examine the causal relationship between the per capita electricity consumption and the per capita GDP for Bangladesh using cointegration and vector error correction model. Our results show that there is unidirectional causality from per capita GDP to per capita electricity consumption. However, the per capita electricity consumption does not cause per capita GDP in case of Bangladesh. The finding has significant implications from the point of view of energy conservation, emission reduction and economic development.     

Electricity consumption and economic growth nexus in Bangladesh: Revisited evidences

In this paper, an attempt is being made to examine the causal relationship between per capita electricity consumption and per capita GDP of Bangladesh using the vector error correction specified Granger causality test to search their short-run, long-run and joint causal relationships for the period of 1971–2008. Empirical findings reveal that there is a short-run unidirectional causal flow running from per capita electricity consumption to per capita GDP without feedback. The presence of a positive short-run causality explains that an increase in electricity consumption directly affects economic activity in Bangladesh. Likewise, results from joint causality exhibit the same as in short-run. By contrast, long-run results show a bi-directional causality running from electricity consumption to economic growth with feedback. These findings can provide essential policy insights to design immediate and long-term growth prospect for Bangladesh keeping in mind its present planned growth strategy and dismal power and energy sector.     

Electricity consumption and economic growth: Exploring panel-specific differences

In this paper, we examine the long- and short-run dynamics between electricity consumption and economic activities, using panel data of per capita electricity consumption and per capita GDP of 160 countries for the period of 1980–2010, accounting for the degree of electricity dependence and the level of urbanization. Furthermore, in order to capture the differences in this relationship, the full sample is divided into various subsamples based on countries' income levels, regional locations and OECD memberships. This framework is argued and found to be appropriate since the causal links and inferences arising therefrom differ considerably among the subsamples, which led us to conclude that the electricity-growth nexus is highly sensitive to regional differences, countries' income levels, urbanization rates and supply risks.     

Turkey’s short-term gross annual electricity demand forecast by fuzzy logic approach

This paper aims to forecast Turkey's short-term gross annual electricity demand by applying fuzzy logic methodology while general information on economical, political and electricity market conditions of the country is also given. Unlike most of the other forecast models about Turkey's electricity demand, which usually uses more than one parameter, gross domestic product (GDP) based on purchasing power parity was the only parameter used in the model. Proposed model made good predictions and captured the system dynamic behavior covering the years of 1970–2014. The model yielded average absolute relative errors of 3.9%. Furthermore, the model estimates a 4.5% decrease in electricity demand of Turkey in 2009 and the electricity demand growth rates are projected to be about 4% between 2010 and 2014. It is concluded that forecasting the Turkey's short-term gross electricity demand with the country's economic performance will provide more reliable projections. Forecasting the annual electricity consumption of a country could be made by any designer with the help of the fuzzy logic procedure described in this paper. The advantage of this model lies on the ability to mimic the human thinking and reasoning.     

Estimation of residential electricity demand in Hong Kong under electricity charge subsidies

Over the past decade, the Hong Kong (HK) government provided electricity charges subsidies for residential accounts to alleviate the burden of inflation and, later, the burden of economic downturn. In this study, we estimate an econometric model of residential electricity demand and test the existence of a stable long-run relationship for the period 1980–2016, while accounting for the relief measures set out by the HK government since 2008. Empirical results suggest that there exists a long-run relationship among residential electricity consumption, electricity price, income per capita, and weather variables (temperature or cooling degree days). In the absence of electricity charge subsidies, the demand is found to be both price and income inelastic. On the other hand, HK's residential electricity consumers are unresponsive to price and income changes when electricity subsidies are in place. Following its new carbon reduction plan, HK is gradually phasing out coal for electricity generation to replace it mainly with natural gas. Our results suggest that new residential electricity charge subsidies can lessen the effectiveness of6 climate policies aimed at reducing electricity consumption through increases in the electricity price.     

CO2 emissions,energy consumption and economic growth in Turkey

This paper examines the long run and causal relationship issues between economic growth, carbon emissions, energy consumption and employment ratio in Turkey by using autoregressive distributed lag bounds testing approach of cointegration. Empirical results for Turkey over the period 1968–2005 suggest an evidence of a long-run relationship between the variables at 5% significance level in Turkey. The estimated income elasticity of carbon emissions per capita is ?0.606 and the income elasticity of energy consumption per capita is 1.375. Results for the existence and direction of Granger causality show that neither carbon emissions per capita nor energy consumption per capita cause real GDP per capita, but employment ratio causes real GDP per capita in the short run. In addition, EKC hypothesis at causal framework by using a linear logarithmic model is not valid in Turkish case. The overall results indicates that energy conservation policies, such as rationing energy consumption and controlling carbon dioxide emissions, are likely to have no adverse effect on the real output growth of Turkey.     

Electricity consumption and economic growth in seven South American countries

This paper attempts to investigate the causal relationship between electricity consumption and economic growth among seven South American countries, namely Argentina, Brazil, Chile, Columbia, Ecuador, Peru, and Venezuela using widely accepted time-series techniques for the period 1975–2006. The results indicate that the causal nexus between electricity consumption and economic growth varies across countries. There is a unidirectional, short-run causality from electricity consumption to real GDP for Argentina, Brazil, Chile, Columbia, and Ecuador. This means that an increase in electricity consumption directly affects economic growth in those countries. In Venezuela, there is a bidirectional causality between electricity consumption and economic growth. This implies that an increase in electricity consumption directly affects economic growth and that economic growth also stimulates further electricity consumption in that country. However, no causal relationships exist in Peru. The documented evidence from seven South American countries can provide useful information for each government with regard to energy and growth policy.     

Economic growth and electricity consumption in Cote d'Ivoire: Evidence from time series analysis

This paper examines the causal relationship between the electric power industry and the economic growth of Cote d'Ivoire. Using the data from 1971 to 2008, a test was conducted for the cointegration and Granger causality within an error correction model. Results from these tests reveal a bidirectional causality between per capita electricity consumption and per capita GDP. A unidirectional causality running from electricity consumption to industry value added appears in the short run. Economic growth is found to have great effects on electricity consumption and a reverse causality from electricity to economic growth may also appear. In the long run, there is a unidirectional causality between electricity and both GDP and industry value added. From these findings, we conclude that the country will be energy dependent in the long run and must therefore secure the production network from shortfalls to ensure a sustainable development path. Accordingly, government should adopt policies aimed at increasing the investment in the sector by stepping up electricity production from existing and new energy sources.     

The causal dynamics between coal consumption and growth: Evidence from emerging market economies

This study examines the relationship between coal consumption and economic growth for 15 emerging market economies within a multivariate panel framework over the period 1980–2006. The heterogeneous panel cointegration results indicate there is a long-run equilibrium relationship between real GDP, coal consumption, real gross fixed capital formation, and the labor force. While in the long-run both real gross fixed capital formation and the labor force have a significant positive impact on real GDP, coal consumption has a significant negative impact. The panel causality tests show bidirectional causality between coal consumption and economic growth in both the short- and long-run.     

Turkish aggregate electricity demand: An outlook to 2020

This paper investigates the relationship between Turkish aggregate electricity consumption, GDP and electricity prices in order to forecast future Turkish aggregate electricity demand. To achieve this, an aggregate electricity demand function for Turkey is estimated by applying the structural time series technique to annual data over the period 1960 to 2008. The results suggest that GDP, electricity prices and a UEDT (Underlying Energy Demand Trend) are all important drivers of Turkish electricity demand. The estimated income and price elasticities are found to be 0.17 and −0.11 respectively with the estimated UEDT found to be generally upward sloping (electricity using) but at a generally decreasing rate. Based on the estimated equation, and different forecast assumptions, it is predicted that Turkish aggregate electricity demand will be somewhere between 259 TWh and 368 TWh in 2020.     

A dynamic panel study of economic development and the electricity consumption-growth nexus

This study examines the relationship between electricity consumption and economic growth for 88 countries categorized into four panels based on the World Bank income classification (high, upper middle, lower middle, and low income) within a multivariate panel framework over the period 1990–2006. The Larsson et al. (2001) panel cointegration test indicates there is a long-run equilibrium relationship between real GDP, coal consumption, real gross fixed capital formation, and the labor force for the high, upper middle, and lower middle income country panels. The results from the panel vector error correction models reveal (1) bidirectional causality between electricity consumption and economic growth in both the short- and long-run for the high income and upper-middle income country panels; (2) unidirectional causality from electricity consumption to economic growth in the short-run, but bidirectional causality in the long-run for the lower-middle income country panel; and (3) unidirectional causality from electricity consumption to economic growth for the low income country panel.     

Electricity consumption forecasting in Italy using linear regression models

The influence of economic and demographic variables on the annual electricity consumption in Italy has been investigated with the intention to develop a long-term consumption forecasting model.The time period considered for the historical data is from 1970 to 2007. Different regression models were developed, using historical electricity consumption, gross domestic product (GDP), gross domestic product per capita (GDP per capita) and population.A first part of the paper considers the estimation of GDP, price and GDP per capita elasticities of domestic and non-domestic electricity consumption. The domestic and non-domestic short run price elasticities are found to be both approximately equal to −0.06, while long run elasticities are equal to −0.24 and −0.09, respectively. On the contrary, the elasticities of GDP and GDP per capita present higher values.In the second part of the paper, different regression models, based on co-integrated or stationary data, are presented. Different statistical tests are employed to check the validity of the proposed models.A comparison with national forecasts, based on complex econometric models, such as Markal-Time, was performed, showing that the developed regressions are congruent with the official projections, with deviations of ±1% for the best case and ±11% for the worst. These deviations are to be considered acceptable in relation to the time span taken into account.     

The relationship between electricity consumption,electricity prices and GDP in Pakistan

This study analyzes the relationship among electricity consumption, its price and real GDP at the aggregate and sectoral level in Pakistan. Using annual data for the period 1960–2008, the study finds the presence of unidirectional causality from real economic activity to electricity consumption. In particular, growth in output in commercial, manufacturing and agricultural sectors tend to increase electricity consumption, while in residential sector, growth in private expenditures is the cause of rising electricity consumption. The study concludes that electricity production and management needs to be better integrated with overall economic planning exercises. This is essential to avoid electricity shortfalls and unplanned load shedding.     

The causal relationship between energy consumption and GDP in Albania,Bulgaria, Hungary and Romania: Evidence from ARDL bound testing approach

The purpose of this study is to investigate the causal relationship between energy and economic growth in Albania, Bulgaria, Hungary and Romania from 1980 to 2006 by employing energy use per capita, electric power consumption per capita and real GDP per capita variables. To examine this linkage, we use the two-step procedure from the Engle and Granger model: In first step, we explore the long-run relationships between the variables by using recently developed autoregressive distributed lag (ARDL) bounds testing approach of cointegration. Secondly, we employ a dynamic vector error correction (VEC) model to test causal relationships between variables. The bounds test yields evidence of a long-run relationship between energy use per capita and real GDP per capita and evidence of two-way (bidirectional) strong Granger causality between these variables only in Hungary. On the other hand, the ARDL bounds test results show that there is no a unique long-term or equilibrium relationship between energy consumption variables and real GDP per capita in Albania, Bulgaria and Romania. In other words, no cointegration exists between these variables in these three countries. The econometric analysis suggests that any causal relationships within dynamic error correction model for Albania, Bulgaria and Romania cannot be estimated.     

Energy consumption with sustainable development in developing country: a case in Jiangsu, China

Jiangsu is one of the provinces in China that have great population density and fast economic development. Therefore it is important to ensure large quantity of stable and high-quality energy supply for its development. With the development of the economy, the demand for energy is increasing very fast while the energy supply is going short. The supply of the local primary energy is only 23% of the demand. The final energy consumption reaches 78 Mtce (1 tce=7,000,000 kcal), among which the industry and construction account for 78%. Though the total consumption is large, the energy consumption per capita is only 1.13 tce, the electricity consumption per capita 1017 kW, and the household electricity consumption per capita is 138 kW. Coal accounts for about 76% of the total energy consumed. This paper discusses utilization ratio of energy and the serious pollution caused by energy consumption.     

电力消费与经济发展关系国际实证分析——基于长期历史数据的考察

实证分析表明,不论以市场汇率法还是以购买力平价法表示,从长期视角审视,英国、美国、日本人均电力消费与人均GDP的长期历史趋势呈现出快速增长和慢速增长两个不同的阶段,韩国仍然处于快速增长的第一阶段,而且定量分析表明人均电力消费与人均GDP在这两个阶段都具有较高的线性拟合优度;英国、美国、日本电力强度的长期历史趋势呈现倒"V"形模式,韩国电力强度仍然处于倒"V"形的上升阶段;电力消费长期趋势的转变与这些国家经济结构的调整有着重要联系。