Short-run and Long-run causality between electricity consumption and economic growth in a small open economy

The aim of this paper is to investigate the causal relationship between electricity consumption and GDP growth for the kingdom of Bahrain during the period 1980–2008. By performing an error-correction model, our results reveal that electricity consumption and GDP are cointegrated. The granger causality tests indicate bi-directional relationship between electricity consumption and GDP growth in the long-run while results of the short-run reveal unidirectional causality relationship between the two variables.