Co-Integration and Causality Relationship between Energy Consumption and Economic Growth: Further Empirical Evidence for Nigeria
Co-Integration and Causality Relationship between Energy Consumption and Economic Growth: Further Empirical Evidence for Nigeria

Summary/Abstract: The Paper re – examined co-integration and causality relationship between energy consumption and economic growth for Nigeria using data covering the period 1970 to 2005. Unlike previous related study for Nigeria, different proxies of energy consumption (electricity demand, domestic crude oil consumption and gas utilization) were used for the estimation. It also included government activities proxied by health expenditure and monetary policy proxied by broad money supply though; emphasis was on energy consumption. Using the Johansen co-integration technique, it was found that there existed a long run relationship among the series. It was also found that all the variables used for the study were I(1). Furthermore, unidirectional causality was established between electricity consumption and economic growth, domestic crude oil production and economic growth as well as between gas utilization and economic growth in Nigeria. While causality runs from electricity consumption to economic growth as well as from gas utilization to economic growth, it was found that causality runs from economic growth to domestic crude oil production. Therefore, conservation policy regarding electricity consumption and gas utilization would harm economic growth in Nigeria while energy conservation policy as regards domestic crude oil consumption would not.

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