ELECTRICITY CONSUMPTION AND ECONOMIC GROWTH NEXUS: A MULTIVARIATE ANALYSIS FOR TURKEY

This study examines the short-run and long-run causality issues between electricity consumption and economic growth in Turkey for 1968-2006 period by using Granger causality models augmented with a lagged error-correction term. The bounds F-test for cointegration test yields evidence of a long-run relationship between employment ratio, electricity consumption per capita and real GDP per capita. The overall results from the three error-correction based Granger causality models show that there is an evidence of unidirectional short-run, long-run and strong causalities running from the electricity consumption per capita to real GDP per capita. But, there is no causal evidence from the real GDP per capita to electricity consumption per capita. In other words, "Growth hypothesis" is confirmed in Turkey. This suggests that electricity consumption plays an important role in economic growth.