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Electricity demand, GDP and employment: evidence from Italy

Electricity demand, GDP and employment: evidence from Italy Abstract This paper applies time series methodologies to examine the causal relationship among electricity demand, real per capita GDP and total labor force for Italy from 1970 to 2009. After a brief introduction, a survey of the economic literature on this issue is reported, before discussing the data and introducing the econometric techniques used. The results of estimation indicate that one cointegrating relationship exists among these variables. This equilibrium relation implies that, in the long-run, GDP and labor force are correlated negatively, as well as GDP and electricity. Moreover, there is a bi-directional Granger causality flow between real per capita GDP and electricity demand; while labor force does not Grangercause neither real per capita GDP nor electricity demand. This implies that electricity demand and economic growth are jointly determined at the same time for the Italian case. The forecast error variance decomposition shows that forecast errors in real per capita GDP are mainly caused by the uncertainty in GDP itself, while forecast errors in labor force are mainly resulted from the labor force itself, although aggregate income and electricity are important, too. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png "Frontiers in Energy" Springer Journals

Electricity demand, GDP and employment: evidence from Italy

"Frontiers in Energy" , Volume 8 (1): 10 – Mar 1, 2014

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Publisher
Springer Journals
Copyright
2014 Higher Education Press and Springer-Verlag Berlin Heidelberg
ISSN
2095-1701
eISSN
2095-1698
DOI
10.1007/s11708-014-0296-8
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper applies time series methodologies to examine the causal relationship among electricity demand, real per capita GDP and total labor force for Italy from 1970 to 2009. After a brief introduction, a survey of the economic literature on this issue is reported, before discussing the data and introducing the econometric techniques used. The results of estimation indicate that one cointegrating relationship exists among these variables. This equilibrium relation implies that, in the long-run, GDP and labor force are correlated negatively, as well as GDP and electricity. Moreover, there is a bi-directional Granger causality flow between real per capita GDP and electricity demand; while labor force does not Grangercause neither real per capita GDP nor electricity demand. This implies that electricity demand and economic growth are jointly determined at the same time for the Italian case. The forecast error variance decomposition shows that forecast errors in real per capita GDP are mainly caused by the uncertainty in GDP itself, while forecast errors in labor force are mainly resulted from the labor force itself, although aggregate income and electricity are important, too.

Journal

"Frontiers in Energy"Springer Journals

Published: Mar 1, 2014

References