Dynamic causality in energy production and output growth in Nigeria revisited: ARDL bounds test approach

Abstract

The current study revisits the dynamic causality in energy production and real output growth in Nigeria. The imperative of energy production in stimulating output growth is generally well documented and appreciated. Thus, the significance of energy as a driving force for economic growth and development is undisputed. The current study adopts the Autoregressive Distributed Lag (ARDL) bounds test methodology developed by Pesaran et al. (2001) with the modified Granger causality test within the framework of an Unrestricted Vector Autoregressive model. Estimation covers the recent time period between 1971 and 2013. The results show the absence of long-run cointergration relationship in the model. The modified causality test validates the neutral hypothesis for Nigeria. Hence, Nigeria can commit to sustainable energy conservation with emphasis on energy efficiency without hurting the real output growth in the country.