Non-linear dynamics of electric power losses, electricity consumption, and GDP in Jamaica

Abstract

We examine the relationship between electric power losses, electric power consumption, and GDP in Jamaica for the period 1971 to 2014 accounting for the non-linear growth in GDP. There are two key findings. First, there are cointegrating relationships between the energy variables and GDP. In the long run, a positive shock to electric power losses has a negative impact on GDP, but one to electric power consumption has a positive impact that peters out over time. Second, in the short run, the growth in the energy variables Granger cause GDP growth. We discuss the implications of these findings.