Electricity consumption and economic growth in transition countries: A revisit using bootstrap panel Granger causality analysis

The purpose of this paper is to revisit the Granger causal relationship between electricity consumption and economic growth for 15 transition economies for the period 1975–2010 using a bootstrap panel causality approach that allows for both cross-sectional dependency and for heterogeneity across countries. Applying this approach, we found a unidirectional causality running from electricity consumption to economic growth only in Belarus and Bulgaria; from economic growth to electricity consumption in the Czech Republic, Latvia, Lithuania and the Russian Federation; bidirectional causality only in Ukraine while no Granger causality in any direction in Albania, Macedonia, Moldova, Poland, Romania, Serbia, Slovak Republic and Slovenia. These results show that there is a limited support for the electricity-led growth hypothesis. Nevertheless these different findings provide important implications for energy strategies and policies for transition countries.