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Electricity Consumption, Economic Growth and Trade Openness in Kazakhstan: Evidence from Cointegration and Causality

Khan, Saleheen and Jam, Farooq Ahmed and Shahbaz, Muhammad and Mamun, Md Al (2018): Electricity Consumption, Economic Growth and Trade Openness in Kazakhstan: Evidence from Cointegration and Causality.

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Abstract

We investigate the relation between electricity consumption and economic growth by incorporating trade openness, capital, and labor in production function of Kazakhstan using annual data for 1991-2014. We apply the ARDL bounds testing and the VECM Granger causality approach to examine long run and causality relation between the variables. Our results confirm the existence of long run relation among the series. The empirical evidence reveals that electricity consumption adds in economic growth. Trade openness stimulates economic growth, and capital and labor promote economic growth, as well. The causality analysis shows that electricity consumption Granger causes economic growth and trade openness. We also document feedback effect between trade openness and economic growth. Our study provides new insights for policy makers to articulate a comprehensive economic, trade and energy policy to sustain long run economic growth in Kazakhstan.

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