TITLE:
Causal Relationship between Electricity Consumption and GDP: Plausible Explanation on Previously Found Inconsistent Conclusions for India
AUTHORS:
Shashi Kant Srivastava
KEYWORDS:
Electricity Consumption, Panel Granger Causality, Error Correction Model, Indian States
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.2,
April
27,
2016
ABSTRACT: Using cross-state panel data and error correction
Granger causality model we found trustworthy results for India that were
non-consistent in previous literature. We found that the electricity
consumption and per capita income cause each other. We argue our research to be
more credible because we use 254 data points whereas, previous researchers have
given their conclusions only on 30 - 40 data points. There is feedback effect
of both the variables and effect of electricity consumption is 40 times more than
that of income to electricity. Furthermore, analysis at disaggregated level of
electricity consumption suggests that domestic and heavy industry electricity
consumption causes income growth and not the commercial, light industry, and
agricultural electricity consumption.