Can electricity consumption be useful in predicting Nigerian economic growth? Evidence from error correction model

Abstract

This paper investigates Granger causality between electricity consumption and Nigerian real GDP, using Vector Error Correction (VEC) Granger Causality/Block Exogeneity Wald Test. The empirical result supports long run bidirectional relationship, which means that electricity consumption predicts economic growth and vice versa in the country, though causality from electricity consumption to economic growth is stronger. This finding is evidence in support of the country's electricity deregulation and reform programme, which is a core component of various projects towards the realisation of Transformation Agenda (TA) and

The relationship between electricity consumption, trade openness and economic growth in India

“…Nasreen and Anwar () also found cointegration among economic activity, trade openness and energy use, and a feedback‐type relationship between energy use and economic activity, energy use and trade openness. Adedokun (), using vector error correction Granger causality, established feedback‐type causality between electricity use and economic activity in a Nigerian case. Solarin et al .…”

“…Nasreen and Anwar (2014) also found cointegration among economic activity, trade openness and energy use, and a feedback-type relationship between energy use and economic activity, energy use and trade openness. Adedokun (2015), using vector error correction Granger causality, established feedback-type causality between electricity use and economic activity in a Nigerian case. Solarin et al (2016) used the combined cointegration test to investigate the dynamics between electricity use and economic activity by considering the relative importance of exports, imports and urbanisation using data for the period 1971-2012 in the case of Angola.…”

Impact of sectoral decompositions of electricity consumption on economic growth in India: evidence from SVAR framework

“…Electricity is considered to be the Granger cause of the growth of an economy. Some other studies (Nasreen and Anwar (2014); Adedokun (2015); Asafu-Adjaye (2000); Apergis and Payne (2010); Apergis and Payne (2011)) support the feedback and conservative hypothesis between usage of electricity and economic growth. In this context, Bayar and Ozel (2014) studies the linkage between economic activity and use of electricity in 21 growing countries, along with India, using Granger causality and panel co-integration analyses.…”

“…Electricity production and consumption have a direct impact on economic growth and development quality. (Salahuddin and Alam (2016); Bhattacharya et al (2016); Rafindadi and Ozturk (2016); Adedokun (2015); Sarwar et al (2017); Cowan et al (2014); Hossain (2012); Omri (2014)) studies the possible association between the use of electricity and economic development activity with respect to four dimensions of (conservative, growth, neutrality, and feedback). Since the economic reform of 1990, Industrialization, Urbanisation, and agricultural modernisation have all contributed to India's rapid economic development.…”