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 Toda, H. Y. and Yamamoto, T. 1995. Statistical inference in vector autoregressions with possibly integrated process. Journal of Econometrics, 66: 225–50. [Crossref], [Web of Science ®] [Google Scholar] ) and Dolado and Lütkepohl ( 1996 Dolado, J. J. and Lütkepohl, H. 1996. Making Wald test work for cointegrated VAR systems. Econometric Reviews, 15: 369–86. [Taylor & Francis Online] [Google Scholar] ). 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.