Causality relationship between electricity consumption and growth: The case of Turkey

Since the late of 1970?s increasing interest in the relationship between energy and economic growth of reseachers has shifted to spesific areas. Examining the relationship between electricity consumption and economic growth is one of these areas. This study investigated the relationship between electricity consumption and economic growth using per capita gross domestic product and per capita electricity consumption annual data during the period of 1980-2010. Cointegration test is applied for questioning the existence of a long-term relationship between these two variables. The empirical results indicates that there is a long-term relationship between electricity consumption and economic growth. Accordingly, causality test is applied. As a result, there is unidirectional causality running from economic growth to electricity consumption. Therefore, energy conservation policies which can be applied to electricity market by policy-makers will not impact negatively on the growth. Key Words : Electricity consumption, economic growth, cointegartion, causality