Original scientific paper
https://doi.org/10.1080/1331677X.2017.1305792
Economic growth, financial development, urbanisation and electricity consumption nexus in UAE
Rashid Sbia
Muhammad Shahbaz
Ilhan Ozturk
orcid.org/0000-0002-6521-0901
Abstract
This study aims to explore the relationship between economic growth,
urbanisation, financial development and electricity consumption in
United Arab Emirates for the period 1975–2011. The ARDL bounds
testing approach is employed to examine the long-run relationship
between the variables in the presence of structural breaks. The
VECM Granger causality is applied to investigate the direction of
causal relationships between the variables. Our empirical exercise
validated the cointegration between the series in the case of United
Arab Emirates. Further, results reveal that an inverted U-shaped
relationship is found between economic growth and electricity
consumption. Financial development adds in electricity consumption.
The relationship between urbanisation and electricity consumption
is also an inverted U-shaped. This implies that urbanisation increases
electricity consumption initially and, after a threshold level of
urbanisation, electricity demand falls. The causality analysis finds
feedback hypothesis between economic growth and electricity
consumption, i.e. economic growth and electricity consumption are
interdependent. The bidirectional causality is found between financial
development and electricity consumption. Economic growth and
urbanisation Granger cause each other. The feedback hypothesis
is also found between urbanisation and financial development,
financial development and economic growth, and the same is true
for electricity consumption and urbanisation.
Keywords
Economic growth; urbanisation; electricity consumption; financial development; UAE
Hrčak ID:
180853
URI
Publication date:
1.12.2017.
Visits: 2.433 *