Electricity consumption and economic growth in Spain

Abstract

This article investigates linear and nonlinear causality between electricity consumption and economic growth in Spain for the period 1971 to 2005. We use the methodology of Toda and Yamamoto (1995) and Dolado and Lütkepohl (1996). We also apply the standard Granger causality test in a vector autoregression for the series in first differences. We find unidirectional linear causality running from real GDP to electricity consumption. By contrast, we find no evidence of nonlinear Granger causality between the series in either direction.

Acknowledgements

We acknowledge financial support from Ministerio de Educación y Ciencia under research grant SEJ2006-06309 and from Dpto. de Educación, Universidades e Investigación del Gobierno Vasco under research grant IT-313-07. We received valuable comments from Marta Regúlez, seminar participants at II Conference of the Spanish Association for Energy Economics 2007 and EcoMod Conference on Energy and Environmental Modeling 2007.

Notes

¹The optimum number of lags, 2, has been selected using Akaike, Schwarz Bayesian and Hannan–Quinn criteria.

²The results of the PP unit root tests do not change significantly.

³The Johansen greatest eigenvalue and trace tests for cointegration have also been applied, but the results do not change.

⁴The lag length is chosen by using the Akaike, Schwarz Bayesian and Hannan–Quinn criteria for a maximum of 4 lags.