Research Paper #2010-7
This study tests the relationship between energy consumption and economic growth in Sub-Saharan African countries. The study uses a Panel Co-integration approach to test the causal relationship between energy consumption and GDP. Country-level time series data of energy consumption and economic growth are pooled and used to estimate the model. Sub-Saharan African countries in the sample are classified into low income and middle income countries. A Panel unit root test and panel co-integration is applied. The findings support the neutrality hypothesis in the short-run except for middle income countries and a strong causation running in both directions is found in the long-run. The different results for low and middle income countries provide evidence of the importance of level of income in the causal relationship. This study helps to explain the interdependence of energy consumption and economic growth in Sub-Saharan African Countries. Results are critical in formulating sustainable development policies that are geared to efficient allocation of resources in Africa which are expected to increase access to energy services in the region.
Digital Commons Citation
Kahsai, Mulugeta; Nondo, Chali; Schaeffer, Peter V.; and Gebremedhin, Tesfa, "Does Level of Income Matter in the Energy Consumption and GDP Nexus: Evidence from Sub-Saharan African Countries" (2010). Regional Research Institute Publications and Working Papers. 43.