رابطه مصرف برق و رشد اقتصادی در پرتغال با استفاده از هم انباشتگی و رویکردهای علیتی

The aim of this paper is to re-examine the relationship between electricity consumption, economic growth, and employment in Portugal using the cointegration and Granger causality frameworks. This study covers the sample period from 1971 to 2009. We examine the presence of a long-run equilibrium relationship using the bounds testing approach to cointegration within the Unrestricted Error-Correction Model (UECM). Moreover, we examine the direction of causality between electricity consumption, economic growth, and employment in Portugal using the Granger causality test within the Vector Error-Correction Model (VECM). As a summary of the empirical findings, we find that electricity consumption, economic growth, and employment in Portugal are cointegrated and there is bi-directional Granger causality between the three variables in the long-run. With the exception of the Granger causality between electricity consumption and economic growth, the rest of the variables are also bi-directional Granger causality in the short-run. Furthermore, we find that there is unidirectional Granger causality running from economic growth to electricity consumption, but no evidence of reversal causality.

Examination of the relationship between electricity consumption and economic growth is not a novel area of exploration; it has been researched extensively over the past decades. Nevertheless, the causality direction between electricity consumption and economic growth remains contradictory. Some empirical studies (e.g. Ghosh, 2002 and Mozumder and Marathe, 2007) claimed that economic growth Granger-causes electricity consumption, while many studies argued that electricity consumption Granger-causes economic growth because electricity is an essential factor of production (e.g. Stern, 1993, Yuan et al., 2007, Tang, 2008 and Tang, 2009). Determination of its causality has important policy implications (Jumbe, 2004 and Squalli, 2007). If the causality direction runs from economic growth to electricity consumption or neutral causality, environmental policies for electricity conservation would not adversely affect economic growth. On the other hand, if the Granger causality direction runs from electricity consumption to economic growth, environmental policies to conserve electricity consumption may weaken the economic growth and development. Hence, it is a debatable issue in the economics of energy and is important to re-investigate empirically the relationship between electricity consumption and economic growth. A literature review suggests that there is a lack of empirical study concerning the relationship between electricity consumption and economic growth in Portugal. To the best of our knowledge, only two studies have considered it. First, Narayan and Prasad (2008) conducted a study on this area for 30 OECD countries, but no attention was paid to explaining the presence of a long-run equilibrium relationship. They only focused on the direction of causality between electricity consumption and economic growth by using the bootstrapping Granger causality approach. In addition, they found evidence of unidirectional causality running from electricity consumption to economic growth in Portugal. Second, Chontanawat et al. (2008) investigated the relationship between energy consumption (kg of oil equivalent per capita) and economic growth over 100 developing countries (i.e. OECD and non-OECD) using the Johansen's cointegration and Hsiao's (1981) version of Granger causality approaches. Remarkably, they also found that energy consumption Granger-causes economic growth in the case of Portugal, but the variables are not cointegrated. Masih and Masih (1996) argued that the Granger causality test is strictly a predictability rather than a causality effect if the variables are not cointegrated. Hence, it is a must to examine the presence of cointegration to affirm the validity of causal relationship. Apart from that, existing studies on this topic in Portugal tend to focus on a bivariate framework, which may be biased owing to the omission of relevant variables (Chang et al., 2001 and Narayan and Smyth, 2005). Thus, the results of a Granger causality test based on a bivariate framework are likely to be biased (Lütkepohl, 1982). Against these backdrops, this study attempts to re-investigate the relationship between electricity consumption and economic growth in Portugal by incorporating employment as a control variable.1 In doing so, this study may avoid the omitted variable(s) bias and the results should be more reliable. At best, this will be the first study on electricity consumption-growth nexus in Portugal using a multivariate framework. Apart from modelling, another contribution of this study is to examine the presence of a long-run equilibrium relationship using the bounds testing approach to cointegration within the UECM framework (Pesaran et al., 2001).2 Although many studies stated that the bounds testing approach to cointegration is suitable for a small sample, the critical values provided by Pesaran et al. (2001) are for a relatively large sample (Narayan, 2005 and Turner, 2006). Therefore, we employ the surface response procedure developed by Turner (2006) to compute a set of critical values for a small sample to enhance the robustness of the cointegration results. Next, this study will employ the Granger causality test within the Error-Correction Model (ECM) to ascertain the causal relationship among electricity consumption, economic growth, and employment in Portugal. The advantage of using the conventional ECM Granger causality test is that it allows us to measure or differentiate the short- and long-run causal relationship, if any. Therefore, it will provide better information for policymakers in formulating short- and/or long-run policies. The rest of this paper will be organised as follows. Section 2 will review the Portuguese context of electricity consumption and economic growth. The literature review will be presented in Section 3. Section 4 will discuss the data and econometric techniques employed by this study. The empirical results and conclusion will be reported in 5 and 6, respectively.

The present article is to re-investigate the linkages between electricity consumption, economic growth, and employment in Portugal for the period of 1971–2009. To achieve the objectives of this study, we utilise the bounds testing approach to cointegration and also the Granger causality test within the VECM framework. Additionally, three formal unit root tests (i.e. ADF, PP, and DF-GLS) are utilised to affirm the order of integration for each series and also to ensure the robustness of using the bounds testing approach to cointegration. The empirical results of this study reveal that electricity consumption, economic growth, and employment in Portugal are moving together in the long-run. Therefore, we perform the Granger causality within the VECM, instead of the first difference VAR framework. Contrary to the existing study on Portugal, our findings suggest that there is unidirectional short-run causality running from economic growth to electricity consumption, while there is bi-directional causality in the long-run. In line with the results of long-run causality, the results of strong Granger causality test also exhibit that electricity consumption and economic growth in Portugal are bi-directional causality in nature. Tellingly, such empirical results demonstrate that the causal relationship shows mixed and conflicting results between short- and long-run causality. The different Granger causality results between the short and long-run imply the need for different policies at different time frame. As the short-run causality results show that electricity consumption does not Granger-causes economic growth, thus environmental friendly policies such as electricity conservation, including efficiency improvement measures and demand-side management policies, which aim to reduce the wastage of electricity, would not adversely affect the economic activity in the short-run. However, the continuous electricity conservation policies may weaken the process of economic growth and development for the Portuguese economy in the long-run. Electricity is used for all categories of people for survival and it has been also used as a basic input for all sectors. In line with this, our empirical results also reveal that electricity consumption and economic growth have bi-directional causality in the long-run. In order to balance environment and economic development in the long-run, exploration of alternative environmentally friendly, or renewable, energies such as solar, hydro, and wind power, should be utilised instead of fossil fuels. Additionally, Portugal should increase investment on research and development (R&D) to design new energy savings technology in the long-run. Therefore, electricity consumption can be reduced without affecting economic growth and development in the Portuguese economy.