Skip to main content Skip to main navigation menu Skip to site footer
  • Register
  • Login
  • Menu
  • Home
  • Current
  • Archives
  • About
    • About the Journal
    • Submissions
    • Editorial Team
    • Privacy Statement
    • Contact
  • Register
  • Login

Dynamic Econometric Models

Energy Consumption and Economic Growth in Ethiopia: Evidence from ARDL Bound Test Approach
  • Home
  • /
  • Energy Consumption and Economic Growth in Ethiopia: Evidence from ARDL Bound Test Approach
  1. Home /
  2. Archives /
  3. Vol. 19 (2019) /
  4. Articles

Energy Consumption and Economic Growth in Ethiopia: Evidence from ARDL Bound Test Approach

Authors

  • Wondatir Atinafu Jimma University, Ethiopia

DOI:

https://doi.org/10.12775/DEM.2019.004

Keywords

Key phrases, economic-growth, energy-consumption, ARDL, Ethiopia, causality

Abstract

The present study aims to investigate the dynamic relationship between economic growth and energy consumption. Specifically, the study tries to answer the questions whether energy consumption has any significance effect on economic growth of the country and it also determined the magnitude of the effect. In doing this, the study used an ARDL bound test approach to analyze Ethiopian data from 1970 to 2017 with real GDP as a function of energy consumption, human capital., physical capital., trade openness and policy change dummy. To do so, secondary data were obtained from WDI, UNCTAD stat and NBE. Co-integration test approves the existence of long-run relationship among the variables. Moreover, the estimation result reveals that, energy consumption found statistically insignificant in affecting economic growth in the long-run. However, it was positive and statistically significant in short-run. Likewise, the dummy variable incorporated to capture the policy change found insignificant in long-run and with positive significant result in short-run. Also, we applied the Granger causality test in linear multivariate models to evaluate how important is the causal impact of energy consumption on economic growth. The results give the evidence of causality running from economic growth to energy consumption supporting “conservation hypothesis”, implying that reducing energy consumption may be implemented with little or no adverse effect on economic growth. Hence, this study recommended the policy makers to improve the existing policies on energy consumption so as to enhance the level of efficiency in the energy sector i.e. energy regulation policies supporting the shift from lower-quality to higher-quality energy services.

Author Biography

Wondatir Atinafu, Jimma University, Ethiopia

Lecturer at Jimma University, College of Business and Economics Department of economics, (Masters of Science in Development Economics)

References

Akinlo, A.E. (2008). Energy Consumption and Economic Growth: Evidence from 11 African Countries. Energy Economics, 30, 2391–2400. http://dx.doi.org/10.1016/j.eneco.2008.01.008

Amirat, A. & Bouri, A. (2010). Energy and Economic Growth: The Algerian Case, type-written.

Chontanawat, J., Hunt, L. & Pierce, R. (2008). Does Energy Consumption Cause Economic Growth? Evidence from Systematic Study of over 100 Countries. Journal of Policy Modelling, 30, 209–220. http://dx.doi.org/10.1016/j.jpolmod.2006.10.003

Easterly, W. (1993). How Much Do Distortions Affect Growth? Journal of Monetary Economics, 32(2), 187–212.

Ebohon, O. J. (1996). Energy, Economic Growth and Causality in Developing Countries: A Case Study of Tanzania and Nigeria. Energy Policy, 24, 447–453.

EEA (2009). Problems and Prospects of Energy Sector in Ethiopia. Bulletin of the Ethiopian Economic Association, 3(5), 7–11.

Enders,W. (1996), Applied Econometric Time Series, Lowa State University: John Wiley & Sons INC.

Engle, R.F. & Granger, C.W.J. (1987). Cointegration, Error Correction Representation, Estimation and Testing. Econometrica, 55, 251–276.

Ghali, K.H. & El-Sakka (2004). Energy Use and Output Growth in Canada: a Multivariate Cointegration Analysis. Energy Economics, 26, 225–238. http://dx.doi.org/10.1016/S0140-9883(03)00056-2

Granger, C.W.J. (1988). Causality, Co-integration, and Control. Journal of Economic Dynamics and Control, 12, 551–559.

Harris, R. (1999), Using Co-integration Analysis in Econometric Modeling, London: Prentice-Hall.

Jumbe, C.B.L. (2004). Co-integration and Causality between Electricity Consumption and GDP: Empirical Evidence from Malawi. Journal of Energy Economics, 26(1), 26–68.

Johansen, S. and K. Juselius (1990), Maximum Likelihood Estimation and Inference of Co-integration: with Applications to the Demand for Money. Oxford Bulletin of Economics and Statistics, 52, 169–210.

Masih, A. M. M., Masih, R. (1998). A Multivariate Co-integrated Modeling Approach in Testing Temporal Causality between Energy Consumption, Real Income and Prices with an Application to Two Asian LDCs. Applied Economics, 30, 1287–1298.

Nondo and Mulugeta. (2009). Energy Consumption and Economic Growth: Evidence from COMESA Countries, Annual Meeting, January 31-February 3, Atlanta, Georgia.

Pesaran, M.H. & Shin, Y. (1998). Generalised Impulse Response Analysis in Linear Multivariate Models. Economics Letters, 58, 17–29.

Pesaran, H. and Y. Shin (1999), An Autoregressive Distributed Lag Modeling Approach to Cointegration Analysis, in: Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium, Strom, S. (ed.) Cambridge University Press.

Pesaran M.H., Shin, Y. and Smith, R. (2001), Bound Testing Approach to the Analysis of Level Relationship. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616

Rahimi, M. and A. Shahabadi (2011), Trade Liberalization and Economic Growth in Iranian Economy, Bu-Ali Sina University, Hamedan, Iran. http://dx.doi.org/10.2139/ssrn.1976299

Romer, D. (1996), Advanced Macroeconomics. New-York: McGraw-Hill.

Stern, D.I. (1993). Energy Use and Economic Growth in the USA, a Multivariate Approach. Energy Economics, 15, 137–150.

Stern, D.I. (2010). Energy Quality. Ecological Economics, 69(7), 1471–1478. http://dx.doi.org/10.1016/j.ecolecon.2010.02.005

Stern, D. I. (2011). The Role of Energy in Economic Growth. Ecological Economics Reviews, 1219, 26–51.

Wolde-Rufael, Y. (2004). Electricity Consumption and Economic Growth: a Time Series Experience for 17 African Countries. Energy Policy, 34, 1106–1114.

Wolde-Rufael, Y. (2005). Energy Demand and Economic Growth: the African Experience. Journal of Policy Modelling, 27(8), 891–903. http://dx.doi.org/10.1016/j.jpolmod.2005.06.003

World Bank (2017). World Development Indicators.

Yohannes, H. (2010). Energy, Growth, and Environmental Interaction in the Ethiopian Economy. Journal of Economic & Financial Modelling, 2(2), 35–47.

Dynamic Econometric Models

Downloads

  • PDF

Published

2019-12-28

How to Cite

1.
ATINAFU, Wondatir. Energy Consumption and Economic Growth in Ethiopia: Evidence from ARDL Bound Test Approach. Dynamic Econometric Models [online]. 28 December 2019, T. 19, s. 57–84. [accessed 7.2.2023]. DOI 10.12775/DEM.2019.004.
  • PN-ISO 690 (Polish)
  • ACM
  • ACS
  • APA
  • ABNT
  • Chicago
  • Harvard
  • IEEE
  • MLA
  • Turabian
  • Vancouver
Download Citation
  • Endnote/Zotero/Mendeley (RIS)
  • BibTeX

Issue

Vol. 19 (2019)

Section

Articles

License

The journal provides an Open Access to its content based on the non-exclusive licence Creative Commons (CC BY-ND 4.0).

To enable the publisher to disseminate the author's work to the fullest extent, the author must agrees to the terms and conditions of the License Agreement with Nicolaus Copernicus University.

Stats

Number of views and downloads: 366
Number of citations: 0

Search

Search

Browse

  • Browse Author Index
  • Issue archive

User

User

Current Issue

  • Atom logo
  • RSS2 logo
  • RSS1 logo

Information

  • For Authors

Newsletter

Newsletter
Unsubscribe

Tags

Search using one of provided tags:

Key phrases, economic-growth, energy-consumption, ARDL, Ethiopia, causality
Up

Akademicka Platforma Czasopism

Najlepsze czasopisma naukowe i akademickie w jednym miejscu

apcz.umk.pl

Partners

  • Akademia Ignatianum w Krakowie
  • Akademickie Towarzystwo Andragogiczne
  • Fundacja Copernicus na rzecz Rozwoju Badań Naukowych
  • Instytut Historii im. Tadeusza Manteuffla Polskiej Akademii Nauk
  • Instytut Kultur Śródziemnomorskich i Orientalnych PAN
  • Karmelitański Instytut Duchowości w Krakowie
  • Państwowa Akademia Nauk Stosowanych w Krośnie
  • Państwowa Akademia Nauk Stosowanych we Włocławku
  • Państwowa Wyższa Szkoła Zawodowa im. Stanisława Pigonia w Krośnie
  • Polskie Towarzystwo Ekonomiczne
  • Polskie Towarzystwo Ludoznawcze
  • Towarzystwo Miłośników Torunia
  • Towarzystwo Naukowe w Toruniu
  • Uniwersytet im. Adama Mickiewicza w Poznaniu
  • Uniwersytet Mikołaja Kopernika
  • Uniwersytet w Białymstoku
  • Uniwersytet Warszawski
  • Wojewódzka Biblioteka Publiczna - Książnica Kopernikańska
  • Wyższe Seminarium Duchowne w Pelplinie / Wydawnictwo Diecezjalne „Bernardinum" w Pelplinie

© 2021- Nicolaus Copernicus University Accessibility statement Shop