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Revisiting the causality between electricity consumption and economic growth in South Africa: a bootstrap rolling-window approach

Author

Listed:
  • Janneke Dlamini
  • Mehmet Balcilar
  • Rangan Gupta
  • Roula Inglesi-Lotz

Abstract

The study revisits the causality relationship between electricity consumption per capita and economic growth per capita in South Africa for the period 1971-2009 using annual data and takes into consideration different time/sample periods in causal relationships using bootstrapping techniques in conjunction with rolling Granger non-causality tests. Full-sample Granger causality tests find no evidence of causal link between electricity consumption and economic growth. However, parameter stability tests indicate that there is instability in our VAR model and therefore findings from our full-sample Granger causality test cannot be relied upon. This motivates the use of bootstrap rolling-window estimation to investigate the electricity consumption-growth nexus which accounts for the time varying causal link between the two variables. The results indicate two sub-periods, 2002-2003 and 2005-2006, whereby electricity consumption had a causal effect on GDP. Apart for these brief sub periods, the results indicate no causality between the two series. However, these sub-sample periods go hand in hand with significant economic events that occurred in the South African electricity market during these sub-sample periods and the economy in general, indicating that the results can be attributed to real life events and not solely on data provided.

Suggested Citation

  • Janneke Dlamini & Mehmet Balcilar & Rangan Gupta & Roula Inglesi-Lotz, 2015. "Revisiting the causality between electricity consumption and economic growth in South Africa: a bootstrap rolling-window approach," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 8(2), pages 169-190.
  • Handle: RePEc:ids:ijepee:v:8:y:2015:i:2:p:169-190
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    Cited by:

    1. Cheng-Yih Hong & Yu-Shuang Yen & Ping-Chieh Chien, 2019. "Sources of Economic Growth and Changes in Energy Consumption: Empirical Evidence for Taiwan (2004-2016)," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 346-352.
    2. Poppy Dyasi & Andrew Phiri, 2019. "A Sectoral Approach to the Electricity-growth Nexus in the Eastern Cape Province of South Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 269-276.
    3. Yaşar Serhat Yaşgül & Burak Güriş, 2016. "Causality between research output in the field of biotechnology and economic growth in Turkey," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(4), pages 1715-1726, July.
    4. Gerard Bikorimana & Charles Rutikanga & Didier Mwizerwa, 2020. "Linking energy consumption with economic growth: Rwanda as a case study," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2020(2), pages 181-200.
    5. Adams, Samuel & Klobodu, Edem Kwame Mensah & Apio, Alfred, 2018. "Renewable and non-renewable energy, regime type and economic growth," Renewable Energy, Elsevier, vol. 125(C), pages 755-767.
    6. Nour Wehbe & Bassam Assaf & Salem Darwich, 2018. "Étude de causalité entre la consommation d’électricité et la croissance économique au Liban," Post-Print hal-01944291, HAL.
    7. Leila Dagher & Ibrahim Jamali & Nasser Badra, 2020. "The Predictive Power of Oil and Commodity Prices for Equity Markets," World Scientific Book Chapters, in: Stéphane Goutte & Khaled Guesmi (ed.), Risk Factors and Contagion in Commodity Markets and Stocks Markets, chapter 3, pages 47-82, World Scientific Publishing Co. Pte. Ltd..
    8. Alexander Bass, 2018. "Does Electricity Supply Matter for Economic Growth in Russia: A Vector Error Correction Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 313-318.
    9. Bah, Muhammad Maladoh & Azam, Muhammad, 2017. "Investigating the relationship between electricity consumption and economic growth: Evidence from South Africa," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 531-537.
    10. Nagmi Moftah Aimer, 2020. "Renewable energy consumption, financial development and economic growth: Evidence from panel data for the Middle East and North African countries," Economics Bulletin, AccessEcon, vol. 40(3), pages 2058-2072.
    11. P. B. Zondi & Z. Robinson, 2021. "The Relationship between Government Debt and Economic Growth in South Africa with Specific Reference to Eskom," EuroEconomica, Danubius University of Galati, issue 2(40), pages 17-34, November.
    12. Juan Meng & Bin Mo & He Nie, 2023. "The dynamics of crude oil future prices on China's energy markets: Quantile‐on‐quantile and casualty‐in‐quantiles approaches," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 43(12), pages 1853-1871, December.
    13. Tafirenyika Sunde, 2018. "The interaction of energy consumption and economic growth in South Africa: assessment from the bounds testing approach," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 10(2), pages 170-183.
    14. repec:eco:journ2:2017-04-29 is not listed on IDEAS
    15. Hlalefang Khobai & Sanderson Abel & Pierre Le Roux, 2016. "Co-integration between Electricity Supply and Economic Growth in South Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 6(3), pages 637-645.

    More about this item

    Keywords

    economic growth; electricity consumption; bootstraping; time-varying causality; South Africa; bootstrap rolling window; Granger non-causality tests; parameter stability; VAR models; value at risk; energy consumption.;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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