Electricity Consumption and Economic Growth in Jordan: Bounds Testing Cointegration Approach

Abstract

The objective of this paper is to investigate the short-run and longrun causal relationships between electricity consumption and economic growth in Jordan between 1976 and 2013, utilizing the Autoregressive Distributed Lag (ARDL) model. Estimates revealed the existence of a longrun equilibrium relationship between the said variables. The VECM model results indicated a long-run, bidirectional causality between the two variables as seen from the negative and significant error correction terms. The results of Granger-Causality test within VECM disclosed a bidirectional weak and strong short-run causality between electricity consumptions per capita and economic growth. The estimation results provide a strong support for the feedback hypothesis in Jordan