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Linking energy consumption with economic growth: Rwanda as a case study

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  • Gerard Bikorimana
  • Charles Rutikanga
  • Didier Mwizerwa

Abstract

This paper analyzes the link between energy consumption and economic growth in Rwanda for the period 1985-2017. The ARDL bounds test was used to test for the existence of co-integration, while the Toda and Yamamoto granger causality test was applied to test for causal direction. The results from the estimation of the ARDL bounds test showed that there was no evidence of co-integration between the considered variables under study. Additionally, the empirical findings confirmed that there was no relationship between economic growth and energy consumption in Rwanda. The findings supported the "neutrality hypothesis" between energy consumption and economic growth. This implies that neither conservative nor expansive policies in relation to energy consumption have any effect on economic growth. Furthermore, the study found a uni-directional granger causality running from energy consumption to economic growth. The results of this findings are consistent with the "growth hypothesis" which postulates that energy consumption leads to economic growth

Suggested Citation

  • 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.
    • Handle: RePEc:fan:efeefe:v:html10.3280/efe2020-002008
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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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