Electricity Consumption and Economic Growth in Nigeria: A Multivariate Investigation

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Author	A K.J Akomolafe,J. Danladi
ISSN	2307-2466
On Pages	177-182
Volume No.	3
Issue No.	4
Issue Date	July 01, 2020
Publishing Date	July 01, 2020
Keywords	Electricity consumption, Economic growth, Stationarity, Vector Error Correction Mechanism, Causality, Nigeria

Abstract

There is a lingering puzzle as to whether electricity consumption has positive, negative or neutral impact on economic growth and also regarding the direction of causation between them. This study examines this relationship in the case of Nigeria. The study introduces capital formation as well as labor stock in a multivariate system for the period covering 1990-2011. Augmented Dickey Fuller test and Philip Perron unit roots test; Johansen test for co integration, vector error correction and Granger causality test are employed. The result of the study shows unidirectional causality from electricity consumption to real gross domestic product. The long run estimates however, supports the Granger causality tests by revealing that electricity consumption is positively related with real gross domestic product in the long run. Investigation further indicates that there is unidirectional causality from capital formation to real gross domestic product. This implies that Nigeria- being a country highly dependent on energy- will have capital formation�s contribution to the economy relatively determined by adequate electricity.

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