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Modeling causality between Electricity consumption and Economic Growth in BIICS Countries

HAMDI, Helmi and SBIA, Rashid (2012): Modeling causality between Electricity consumption and Economic Growth in BIICS Countries.

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Abstract

This paper tests the causal relationship between electricity consumption per capita and gross domestic product (GDP) per capita for Brazil, India, Indonesia, China and South Africa for the period 1971–2009. To reach this goal, we use panel cointegration analysis and Granger causality tests. Our results reveal that electricity consumption and GDP are cointegrated and the granger causality tests indicate a long-run relationship between electricity consumption and GDP growth for all countries except for South Africa. The short-run estimations indicate that GDP granger cause electricity consumption but not the reverse; hence the existence of unidirectional short-run causality relationship the two variables.

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