Conscientia Beam || conscientiabeam.com

Export to

Citations

Contact Us

For Marketing, Sales and Subscriptions Inquiries

2637 E Atlantic Blvd #43110
Pompano Beach, FL 33062

USA

Conference List

The Economics and Finance Letters

June 2019, Volume 6, 2, pp 170-177

Structural Breaks, Electricity Generation and Economic Growth in Nigeria

Iyabo Adeola Olanrele

Iyabo Adeola Olanrele¹

Economics and Business Policy Department, Nigerian Institute of Social and Economic Research (NISER), Nigeria. ¹

on Google Scholar

Olanrele Iyabo Adeola

on PubMed

Olanrele Iyabo Adeola

Pages: 170-177

DOI: 10.18488/journal.29.2019.62.170.177

Article History:

Received: 07 June, 2019
Revised: 15 July, 2019
Accepted: 20 August, 2019
Published: 03 October, 2019

View Citation

320Views

Create Citation Alert

Abstract:

Instability and low electricity generation in Nigeria has continued to raise concerns. The power sector reforms aimed at enhancing increased and stable electricity generation over the decades have not been economic growth oriented. Among other factors, obsolete and poor infrastructural equipment as well as inadequate investment has continued to impede the optimal impact of the power sector. This paper used full sample VAR and structural breaks approach-rolling impulse response(RIR) model-to obtain evidence for changes in the impact of electricity generation on Nigerian economic growth based on quarterly data from 1970 to 2016. Findings revealed that electricity generation does not Granger-cause real GDP growth rate and gross fixed capital formation, while a short-run relationship exist for labour force. No strong dynamic relationship exists between electricity generation and real GDP growth over the lag period. Lastly, result from RIR technique also showed that real GDP growth rate does not respond to impulses from electricity generation over the years, but for weak impact in the early 1980s.

Contribution/ Originality
This study contributes to the existing literature by examining the relationship between electricity production and economic growth in Nigeria using a recent innovative structural break approach (Rolling impulse response). The approach was used to capture the variations in economic growth that arises from structural changes relating to electricity generation overtime.

Keywords:

Electricity generation, Economic growth, Nigeria, Rolling impulse approach.

Reference:

Akinlo, A.E., 2009. Electricity consumption and economic growth in Nigeria: Evidence fromcointegration and co-feature analysis. Journal of Policy Modeling, 31(5): 681–693.Available at: https://doi.org/10.1016/j.jpolmod.2009.03.004.

Blanchard, O. and J. Gali, 2007. The macroeconomic effects of oil shocks: Why arethe 2000s so different from the 1970s?” NBER Working Paper No. 13368.

Edquist, H. and M. Henrekson, 2006. Technological breakthroughs and productivity growth. Research institute of industrial economics. IFN Working Paper No. 665.

Electricity Installed Capacity, 2018. Nigeria energy profile. Available from https://www.indexmundi.com/nigeria/energy_profile.html.

Farzanegan, M.R. and G. Markwardt, 2009. The effects of oil price shocks on the Iranian economy. Energy Economics, 31(1): 134-151.Available at: https://doi.org/10.1016/j.eneco.2008.09.003.

International Electricity Agency, 2018. Electricity information. Available from https://webstore.iea.org/electricity-information-2018.

Iwayemi, A., 2016. No fuel, no power: Towards a sustainable exit strategy from Nigeria’s persistent energy paradoxes. Nigeria Association of Energy Economics (NAEE) Forum. 4th Edn., Available from: https://www.naee.org.ng.

Iwayemi, A. and B. Fowowe, 2011a. Impact of oil price shocks on selected macroeconomic variables in Nigeria. Energy Policy, 39(2): 603-612.Available at: https://doi.org/10.1016/j.enpol.2010.10.033.

Iyke, B.N., 2015. Electricity consumption and economic growth in Nigeria: A revisit of the energy-growth debate, Energy Economics, 51(c): 166-167.

Lee, C.-C. and C.-P. Chang, 2005. Structural breaks, energy consumption, and economic growth revisited: Evidence from Taiwan. Energy Economics, 27(6): 857-872.

Naka, A. and D. Tufte, 1997. Examining impulse response functions in cointegrated systems. Applied Economics, 29(12): 1593-1603.Available at: https://doi.org/10.1080/00036849700000035.

National Electric Power Authority (NEPA), 2004. Power reform and power-generation plans in the public and private sectors. Abuja, Nigeria.

Ogagavwodia, J., E. Matthew and B. Ohwofasa, 2014. Power supply and national development, 1980-2012: The Nigeria experience. International Journal of Humanities and Social Science, 4(8): 144-154.

Ogundipe, A.A. and A. Apata, 2013. Electricity consumption and economic growth in Nigeria. Journal of Business Management and Applied Economics, 2(4): 1-14.

Straub, S., 2008. Infrastructure and growth in developing countries: Recent advances and research challenges. World Bank, Policy Research Working Paper No. 4460, Washington D.C.

Turhan, I., E. Hacihasanoglu and U. Soytas, 2012. Oil prices and emerging market exchange rates. Bank of the Republic of Turkey Working Paper, No. 12/01.

World Bank World Development Indicator (WDI), 2018. Electricity generation by fuel. Available from https://data.worldbank.org/country/nigeria.

Yoo, S.-H. and Y. Kim, 2006. Electricity generation and economic growth in Indonesia. Energy, 31(14): 2890-2899. Available at: https://doi.org/10.1016/j.energy.2005.11.018.