Abstract
In this study, the role of electricity on economic growth was investigated after the liberalization policies implemented in 1980 for the European Union. The main objective of the study is to present the relationship between electricity consumption and economic growth in the European Union and to propose economically efficient and feasible energy policies. For this purpose, the ARDL Bound Test Approach for the determination of the long-term relationship and Toda-Yamamoto Causality Analysis for the causality relation were used with the annual data for the period 1980-2014. The results show that electricity consumption has positive effect on economic growth in the long-run. Moreover, the results of Toda-Yamamoto Causality Analysis confirm the Growth Hypothesis, which argues that there is uni-directional causality relationship from electricity consumption to economic growth in the European Union.
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