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Electricity consumption and economic growth causality revisited: evidence from Turkey

Muhammad, Shahbaz and Ilhan, Ozturk (2012): Electricity consumption and economic growth causality revisited: evidence from Turkey.

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Abstract

The study reconsiders the relationship between electricity consumption and economic growth by incorporating financial development, capital and labor as important factors of production using augmented production function in Turkey for the period of 1971-2009. In doing so, we applied ARDL bounds testing approach and found long run relationship between electricity consumption, economic growth, financial development, capital and labour. Further,results indicated that electricity consumption, financial development, capital and labor have positive effect on economic growth. The VECM granger causality analysis shows bidirectional causality between electricity consumption, economic growth, financial development,capital and labor. The findings have important policy implication to sustain economic growth through comprehensive energy policy and developing financial sector in Turkey.

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