Cointegration and causality among electricity consumption, economic, climatic and environmental factors: Evidence from North -Africa region

Abstract

This paper investigates the relationship among carbon dioxide emissions, economic growth and electricity consumption in the presence of two other variables which are trade openness and annual average temperature. The study uses data of four selected North- African countries over the period 1971–2014. We use the Autoregressive Distributed Lag Cointegration approach (ARDL) known as the Bounds approach. The obtained results confirm the existence of long run equilibrium among the studied variables. The long run analysis reveals that economic growth and electricity consumption are the main cause of environment degradation, while the increased temperature over the year leads to increase electricity consumption in Egypt and Morocco. On the other hand, the analysis of short run causalities confirms the growth hypothesis in these two countries. Furthermore, the feedback relationship between economic growth and electricity consumption has been confirmed in Tunisia. These findings imply that environmental and economic corrective measures have to be adopted to achieve green growth and sustainable development.