Energy consumption and economic growth: causality relationship for Nigeria

Abstract

In this paper, cointegration and causality between energy consumption and gross domestic product (GDP) in Nigeria over the period 1971-2006 were analysed. The study used vector error correction models to test the relationships. The results of these tests showed the existence of cointegration as well as unidirectional causality-running from GDP to energy in Nigeria. The conclusion from these results was that decline in GDP or economic recession may have an adverse effects on energy consumption in Nigeria. However, energy conservation policies could be effectively implemented without any negative consequence on the growth of GDP in Nigeria.