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Energy Consumption and Economic Growth Nexus: New Empirical Evidence from Nigeria

Author

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  • Bamidele P. Abalaba

    (Department of Economics, College of Management and Social Sciences, Osun State University, Okuku Campus, Okuku, Osun State, Nigeria)

  • Matthew Abiodun Dada

    (PGS Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria)

Abstract

This study analysed the trend of energy consumption, real output, financial development, monetary policy rate and consumer prices and also examined the long-run relationship and direction of causality between energy consumption and economic growth with consideration for financial development, monetary policy rate and consumer prices. These were with a view to examining the relationship between energy consumption and economic growth in Nigeria during the period 1971-2010. The result showed that all the variables used in the study are characterized by a positive trend. Also, it was found that variables followed a I(1) process. The study provides weak evidence in support of long-run relationship between energy consumption and economic growth. The study further revealed that energy consumption among other variables positively and significantly influenced output growth in the short-run. Using the first three lags, we found no causal evidence one way or two way between energy consumption and economic growth. The study concluded that energy consumption only has short-run positive impact on the economy but has not enhanced long-run economic growth in Nigeria during the period under investigation.

Suggested Citation

  • Bamidele P. Abalaba & Matthew Abiodun Dada, 2013. "Energy Consumption and Economic Growth Nexus: New Empirical Evidence from Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 3(4), pages 412-423.
    • Handle: RePEc:eco:journ2:2013-04-25
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    References listed on IDEAS

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    Cited by:

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    2. Maduka, Anne C. & Madichie, Chekwube V. & Ajufo, Ikechukwu H., 2020. "Modelling Household Electricity Consumption and Living Standard in Nigeria," African Journal of Economic Review, African Journal of Economic Review, vol. 8(2), July.
    3. Farzana Sharmin & Mohammed Robayet Khan & Mohammed Robayet Khan, 2016. "A Causal Relationship between Energy Consumption, Energy Prices and Economic Growth in Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 6(3), pages 477-494.
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    5. Egbichi Comfort & Abuh Ojamaliya & Okafor Victoria & Godwin Abigail & Adedoyin Oluwapelumi, 2018. "Dynamic Impact of Energy Consumption on the Growth of Nigeria Economy (1986-2016): Evidence from Symmetrical Autoregressive Distributed Lag Model," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 188-195.
    6. Yilmaz Bayar & Marius Dan Gavriletea, 2019. "Energy efficiency, renewable energy, economic growth: evidence from emerging market economies," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(4), pages 2221-2234, July.
    7. George N. Botzoris & Athanasios T. Galanis & Vassilios A. Profillidis & Nikolaos E. Eliou, 2015. "Coupling and Decoupling Relationships between Energy Consumption and Air Pollution from the Transport Sector and the Economic Activity," International Journal of Energy Economics and Policy, Econjournals, vol. 5(4), pages 949-954.
    8. Okyay U an & Ebru Ar c o lu & Fatih Y cel, 2014. "Energy Consumption and Economic Growth Nexus: Evidence from Developed Countries in Europe," International Journal of Energy Economics and Policy, Econjournals, vol. 4(3), pages 411-419.

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    More about this item

    Keywords

    Error correction model; aggregated analysis; energy consumption; financial development; monetary policy rate;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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