Threshold cointegration and causality relationship between energy use and growth in seven African countries

Abstract

The paper investigates the long-run and the causality relationship between energy consumption and economic growth for seven Sub-Saharan African countries during the period 1970–2007. Using the Gregory and Hansen (1996a, 1996b) testing approach to threshold cointegration, we find that energy consumption is cointegrated with economic growth in Cameroon, Cote d'Ivoire, Ghana, Nigeria and South Africa. Moreover, this test suggests that economic growth has a significant positive long-run impact on energy consumption in these countries before 1988 and this effect becomes negative after 1988 in Ghana and South Africa. Furthermore, causality tests suggest bidirectional causality between energy consumption and real GDP in Cote d'Ivoire and unidirectional causality running from real GDP to energy usage in the case of Congo and Ghana.