International Academic Journal of Economics

  • ISSN 2454-2474

Causal interactions between economic growth and electricity consumption in 46 African countries: Dynamic Simultaneous Equation Models

Saida Zaidi and Sonia Zouari-Ghorbel

Abstract: In this paper, we try to examine the causal relationship between electricity consumption and economic development. This is done using panel data from 46 African countries covering the period 1996-2013. We divide the sample according to the principal component analysis in two groups. The empirical analysis used to evaluate the relationship between economic development and electricity consumption is based on a simultaneous equation model estimated by the generalized moments method (system GMM). The results indicate the existence of bidirectional causality relationship between GDP and electricity consumption for the entire sample as well as for the first group of countries. In terms of political stability, this variable has a negative and significant effect on electricity consumption and economic development only in the first group of countries.

Keywords: Economic Growth, Electricity Consumption, System GMM, PCA, Dynamic Simultaneous Equation Models

Page: 55-66

DOI: 10.9756/IAJE/V5I2/1810015

Volume 5, Issue 2, 2018