The Nonlinear Dynamics of Electricity Consumption and Real GDP per Capita: Evidence from Selected MENA Countries

Hüseyin Alperen Özer, Mesut Karakaş, Taner Turan

Abstract


This study investigates the long-run relationship between electricity consumption and real GDP per capita utilizing nonlinear autoregressive distributed lag model (NARDL) developed by Shin et al. (2014). Our dataset contain yearly real GDP per capita and electricity consumption per capita for 4 MENA countries (Algeria, Jordan, Oman, UAE) from 1974 to 2014. The empirical results reveal that there exist long-run relationships in the cases of Jordan and UAE. Our results also provide evidence for the asymmetry between electricity consumption and real GDP per capita in these countries. However, we find no long-run relationship between electrical consumption and GDP per capita in the cases of Oman and Algeria. The findings of our study support the feedback hypothesis only for UAE, which presents a bilateral causality between electricity consumption and GDP per capita. As a policy implication, we propose that policies aiming to promote growth by means of energy consumption have non-negligible advantages for the less developed countries.


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