Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
8Activity
0 of .
Results for:
No results containing your search query
P. 1
“The Relationship Between Economic Growth and Electricity Consumption in Africa: MS-VAR and MS-Granger Causality Analysis," by Melike E. Bildirici

“The Relationship Between Economic Growth and Electricity Consumption in Africa: MS-VAR and MS-Granger Causality Analysis," by Melike E. Bildirici

Ratings:

5.0

(3)
|Views: 652 |Likes:

Knowledge of the direction of the causality between electricity consumption and economic growth is of primary importance if appropriate energy policies and energy conservation measures are to be devised. This study estimates the causality relationship between electricity consumption and economic growth by Markov Switching Vector Auto Regression (MS-VAR) and Markov Switching Granger Causality (MS-Granger) methods for nine African countries: Algeria, Egypt, Morocco, Nigeria, South Africa, Sudan, Togo, Tunisia, and Zimbabwe. For all countries, electricity consumption is the Granger cause of the economic growth. According to the second equation, economic growth appears to be the Granger cause of electricity consumption in the three economic regimes we studied (recessionary, moderate growth, and high growth). In summation, some evidence was found of bi-directional Granger causality between electricity consumption and economic growth for the countries we analyzed. Published in the Journal of Energy and Development as Melike E. Bildirici, “The Relationship Between Economic Growth and Electricity Consumption in Africa: MS-VAR and MS-Granger Causality Analysis,” The Journal of Energy and Development, volume 37, no. 2 (spring 2012, copyright 2012), pp. 179–205.

Knowledge of the direction of the causality between electricity consumption and economic growth is of primary importance if appropriate energy policies and energy conservation measures are to be devised. This study estimates the causality relationship between electricity consumption and economic growth by Markov Switching Vector Auto Regression (MS-VAR) and Markov Switching Granger Causality (MS-Granger) methods for nine African countries: Algeria, Egypt, Morocco, Nigeria, South Africa, Sudan, Togo, Tunisia, and Zimbabwe. For all countries, electricity consumption is the Granger cause of the economic growth. According to the second equation, economic growth appears to be the Granger cause of electricity consumption in the three economic regimes we studied (recessionary, moderate growth, and high growth). In summation, some evidence was found of bi-directional Granger causality between electricity consumption and economic growth for the countries we analyzed. Published in the Journal of Energy and Development as Melike E. Bildirici, “The Relationship Between Economic Growth and Electricity Consumption in Africa: MS-VAR and MS-Granger Causality Analysis,” The Journal of Energy and Development, volume 37, no. 2 (spring 2012, copyright 2012), pp. 179–205.

More info:

Categories:Types, Research
Copyright:Traditional Copyright: All rights reserved

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

05/14/2014

pdf

text

original

 
 
THE JOURNAL OF ENERGYAND DEVELOPMENT
Melike E. Bildirici,
The Relationship between Economic Growth and Electricity Consumption in Africa: MS-VAR and MS-Granger Causality Analysis,
 
Volume 37, Number 2Copyright 2012
 
THE RELATIONSHIP BETWEEN ECONOMICGROWTH AND ELECTRICITY CONSUMPTIONIN AFRICA: MS-VAR AND MS-GRANGER CAUSALITY ANALYSIS
 Melike E. Bildirici
*
 Introduction
T
he relationship between energy consumption and economic growth is of greatimportance for both developed and developing nations.
1
The level of energyconsumption is a measure of economic development, and energy itself is a mainfactor of production in addition to the traditional inputs—capital and labor—amongothers (i.e., raw materials, technology). Energy and electricity consumption playa vital role in the economic development of countries and, therefore, have becomea focus of many involved in the economics arena.Electricity consumption has been analyzed through a plethora of perspectiveswithin the field of energy economics. In much of the literature, energy con-sumption is a significant metric in assessing the level of economic development;other research has concentrated on energy as a key factor in the production pro-cess. The seminal works of H. Houthakker, F. Fisher and C. Kaysen, R. Baxter and R. Ress, H. Houthakker and L. Taylor, J. Wilson, T. Cargill and R. Mayer,K. Anderson, and T. Mount et al. have focused on energy demand and price and 
*Melike Bildirici, Professor at the Yildiz Technical University in Istanbul, Turkey, holds a B.S.from Marmara University (Istanbul) and earned both his M.A. and Ph.D. degrees in economics fromthat institution. Dr. Bildirici’s studies have appeared in such publications as
The Journal of Energyand Development 
,
Expert Systems with Applications
,
Family History
,
Energy Economics
,
JRSE 
,
 Applied Econometrics and International Development 
,
The International Journal of Applie Econometrics and Quantitative Studies
,
The Journal of Economic and Social Research
,
METU Studies in Development 
,
YKER
,
Iktisat 
, and 
Isletme and Finans
.
The Journal of Energy and Development 
, Vol. 37, Nos. 1 and 2Copyright
Ó
2012 by the International Research Center for Energy and Economic Development(ICEED). All rights reserved.
179
 
income elasticities of energy.
2
In these pioneering studies, some papers empha-sized energy as a major factor of production. R. Rasche and J. Tatom’s work determined that the increase of energy prices stimulated the decreasing trends ongross national product (GNP) by using energy, land, labor, and capital.
3
J. Kraftand A. Kraft, A. Akarca and T. Long, E. Yu and J. Choi, and U. Erol and E. Yuanalyzed the causality relationship between electricity/energy consumption and economic growth.
4
Subsequent studies that followed examined the causality be-tween electricity consumption and economic growth in various countries and regions.When reviewing the results obtained from the academic research regarding therelationship between electricity consumption and economic growth, it was found that different conclusions about the direction of causality are obtained. The dif-ferences in these causality results can be categorized into four hypotheses:‘neutrality hypothesis,’’ ‘‘conservation hypothesis,’’ ‘‘growth hypothesis,’’ an‘‘feedback hypothesis.’’ (1) The
neutrality hypothesis
suggests that there is nocausality between economic growth and energy (electricity) consumption. (2) The
 feedback hypothesis
states that a bi-directional causality exists running betweeneconomic growth and energy (electricity) consumption and between energyconsumption and economic growth. (3) The
conservation hypothesis
asserts thatcausality is uni-directional running from economic growth to energy (electricity)consumption. When causality runs from economic growth to energy consumption,an economy is less dependent on energy; thus, energy conservation policies, suchas phasing out energy subsidies, may not adversely affect economic growth. (4)The
growth hypothesis
evaluates the existence of uni-directional causality fromenergy (electricity) consumption to economic growth.
5
According to the growthhypothesis, a state’s economy is energy dependent. In this case, the reduction of energy (electricity) consumption will lead to a decline in economic growth be-cause energy consumption is a prerequisite for this growth; thus, energy is a directinput in the production process and/or is an indirect input that complements labor and capital inputs. This implies that a negative shock to electricity consumptionleads to higher electricity prices or electricity conservation policies and, in turn,will have a negative impact on GDP.
6
To date, energy economists primarily have focused on causality between en-ergy and economic growth in European and Asian countries, with relatively fewer studies concentrating on African nations (A. Akinlo, A. Kouakou, N. Odhiambo,C. Jumbe, Y. Wolde-Rufael, G. De Vita et al., J. Squalli, K. Jefferis, M. Belloumi,S. Nondo et al., and C. Adebola).
7
These papers primarily utilized conventionalmethods of analysis: autoregressive distributed lag (ARDL), Johansen and EngleGranger cointegration, and the like. However, these methods are not suitable whenattempting to model business cycle conditions. With these approaches, the pa-rameters are assumed to be constant over the sample period, which means therelationship between GDP and energy and/or electricity consumption is assumed THE JOURNAL OF ENERGY AND DEVELOPMENT180

Activity (8)

You've already reviewed this. Edit your review.
1 hundred reads
1 thousand reads
Ch Hamza Islam liked this
yildizkitapci liked this
yildizkitapci liked this
melikecim liked this
yildizbildirici liked this
ortss liked this

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->