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ABSTRACT
This study attempts to investigate the causal relationship between electricity consumption and economic growth in Nicaragua. To this end, the study applies Graner-causality tests to annual Nicaraguan data for the period 1971–2010. The overall results support the existence of bi-directional causality between electricity consumption and economic growth in Nicaragua. This means that an increase in electricity consumption directly affects economic growth. Thus, in order not to make an adverse effect on economic growth, Nicaragua should endeavor to overcome the constraints on electricity consumption. Moreover, it appears that economic growth induces an increase in electricity consumption.