Electricity Consumption and Economic Growth: A Causality Analysis for Turkey in The Frame of Import-Based Energy Consumption and Current Account Deficit

Abstract

In this study, first the relationship between electricity consumption (EC) and economic growth is analyzed using three different approaches to eliminate mis-specified statistical models and biased outcomes. Then, the relationship between primary energy resources, which are import-based and used to produce electricity, and current account balance (CAB) is investigated. The rationale behind analyzing the relationship between import-based energy consumption and CAB lies on understanding the potential positive and negative effects of energy consumption on economy. Statistical results show that (1) unidirectional causality running from EC to economic growth has been found for the case of Turkey and (2) there is a bidirectional causality running from import-based EC to current account deficit.