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The impact of energy demand on economic growth: A new empirical evidence for Madagascar

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  • Ramaharo, Franck Maminirina

    (Ministry of Economy and Finance (Ministère de l'Economie et des Finances))

  • Razanajatovo, Yves Heritiana Mihaja

    (Ministry of Economy and Finance (Ministère de l'Economie et des Finances))

  • Ravelomanantsoa, Fabienne Mahefatiana
  • Ramarosandratana, Saotra Finiavana Melodia
  • Aljaona, Emanuella Miora

    (Ministère de l'Economie et des Finances)

Abstract

This study investigates the impact of energy demand on Madagascar's economic growth from 2007Q1 to 2022Q4. Drawing upon a rich dataset from Malagasy sources, we applied the ARDL bounds testing approach and found cointegration among the series. We found that, in the long run, electricity and petroleum consumption have positive significant effects on economic growth, while energy imports and global prices have negative significant effects. We further applied Granger-causality test based on Error Correction Model to examine causal relationships. The results revealed that in the short run, there are unidirectional causal effects running from electricity consumption, energy imports, and global prices to economic growth. The test also revealed that both energy demand and global prices have a long-run causal effect on economic growth. Our findings confirms that Madagascar is an energy-dependent economy, and provide valuable insights for policymakers to design effective energy policies that promote economic growth and energy security.

Suggested Citation

  • Ramaharo, Franck Maminirina & Razanajatovo, Yves Heritiana Mihaja & Ravelomanantsoa, Fabienne Mahefatiana & Ramarosandratana, Saotra Finiavana Melodia & Aljaona, Emanuella Miora, 2024. "The impact of energy demand on economic growth: A new empirical evidence for Madagascar," AfricArxiv xwktc_v1, Center for Open Science.
    • Handle: RePEc:osf:africa:xwktc_v1
    DOI: 10.31219/osf.io/xwktc_v1
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