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Trivariate Causality between Economic Growth, Urbanisation and Electricity Consumption in Angola: Cointegration and Causality Analysis

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Keywords
  • D6 - Welfare Economics
Disciplines
  • Economics

Abstract

This paper investigates the causal relationship between economic growth, urbanisation and electricity consumption in the case of Angola, utilizing the data over the period of 1971- 2009. We have applied Lee and Strazicich (2003, 2004) unit root test to test the stationarity properties of the series. Gregory-Hansen structural break cointegration procedure as complement, we employed the ARDL bounds test to examine long run relationship. The VECM Granger causality test is subsequently used to examine the direction of causality between economic growth, urbanisation and electricity consumption. Our results indicate the existence of long run relationship. We further observe evidence in favour of bidirectional causality between electricity consumption and economic growth. The feedback hypothesis is also found between urbanization and economic growth. Urbanization and electricity consumption Granger cause each other. We conclude that Angola is an energy (electricity) dependent country. Consequently, the relevant authorities should boost electricity production as one of the means of achieving sustainable economic development for long span of time.

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