Trivariate causality between economic growth, urbanisation and electricity consumption in Angola: Cointegration and causality analysis

This paper investigates the causal relationship between economic growth, urbanisation and electricity consumption in the case of Angola, while utilizing the data over the period of 1971–2009. We have applied Lee and Strazicich (2003. The Review of Economics and Statistics 63, 1082–1089; 2004. Working Paper. Department of Economics, Appalachian State University) unit root tests to examine the stationarity properties of the series. Using the Gregory–Hansen structural break cointegration procedure as a complement, we employ the ARDL bounds test to investigate long run relationships. The VECM Granger causality test is subsequently used to examine the direction of causality between economic growth, urbanisation, and electricity consumption. Our results indicate the existence of long run relationships. We further observe evidence in favour of bidirectional causality between electricity consumption and economic growth. The feedback hypothesis is also found between urbanisation and economic growth. Urbanisation and electricity consumption Granger cause each other. We conclude that Angola is energy-dependent country. Consequently, the relevant authorities should boost electricity production as one of the means of achieving sustainable economic development in the long run.