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Electricity Consumption and Economic Growth in Portugal: Evidence from a Multivariate Framework Analysis

Abstract:
The purpose of this study is to re-visit the relationship between electricity consumption and economic growth in Portugal over the sample period of 1974 to 2008 in a multivariate framework. The results of this study indicate that the variables are cointegrated and the causal relationship between electricity consumption and economic growth in Portugal is bi-directional. Uni-directional causalities running from energy price and real income to employment are also found. Contrary to earlier studies, our results indicate that Portugal is an energy-dependent economy and energy-conservation policies could be detrimental to its economic growth and development. Therefore, renewable energy sources such as bio-fuel, solar power, hydro power, wind power, and wave power should be aggressively explored to ensure sufficient supply of energy to support the growth of the Portuguese economy in an environment-friendly manner. Keywords: Electricity consumption, Employment, Income, Price, Portugal

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Energy Specializations: Energy Modeling – Energy Data, Modeling, and Policy Analysis; Electricity – Markets and Prices ; Energy and the Economy – Energy as a Productive Input; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance; Energy and the Economy – Energy Shocks and Business Cycles

JEL Codes:
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
D42 - Market Structure, Pricing, and Design: Monopoly
O13 - Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q34 - Natural Resources and Domestic and International Conflicts
F44 - International Business Cycles

DOI: 10.5547/01956574.33.4.2

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Published in Volume 33, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.