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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

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Olanrele Iyabo Adeola

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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

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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.

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