The Relationship between the Consumption of Electricity for Domestic Purposes and Economic Growth in Jordan

M. Shahateet, S. Tayyeb, Amal Rawashdih

Abstract


This study aimed to analyze the relationship between the consumption of electricity for domestic purposes and economic growth in Jordan. It also explores the determinants of this relationship during the period 1980-2012. The study constructs a Vector Auto Regressive VAR model based on economic theory and methodology applied in energy economics models. In addition, it applied a Vector Error Correction model VECM. To examine the performance of the model, several tests were applied, notably the unit root test, the number-of-lags test, co-integration test, and Granger’s causality test. The results of model estimation showed that the consumption of electricity was not affected by GDP per capita, and there was a significant negative effect of the price of electricity on electricity consumption. It was evident from the results that the causal relationships between the variables of the model were unidirectional, which is consistent with economic theory regarding the demand for goods, production, and prices.

Keywords


Electricity Consumption, VAR model, Co-integration, Test of Causality, Jordan

Full Text:

PDF

Refbacks

  • There are currently no refbacks.