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Economic growth, energy consumption and government expenditure:evidence from a nonlinear ARDL analysis

Adebumiti, Qazeem and Masih, Mansur (2018): Economic growth, energy consumption and government expenditure:evidence from a nonlinear ARDL analysis.

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Abstract

This study investigates the nonlinear asymmetric relationship between energy consumption and economic growth by incorporating government expenditure and oil prices into a production function using Nigerian economy from 1980-2014. The nonlinear autoregressive distributed lag bounds testing approach is applied to examine the asymmetric cointegration between the variables. An asymmetric causality test is also employed to examine the causal association between the considered variables. The results indicate cointegration between the variables in the presence of asymmetries. The asymmetric causality results show that negative shocks to energy consumption have impacts on economic growth. Likewise, negative shocks to government expenditure have impacts on economic growth. The implications of these results for growth policies in Nigeria are also examined.

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