Electricity demand, GDP and employment: evidence from Italy

doi:10.1007/s11708-014-0296-8

Front. Energy

2014, Vol. 8

Issue (1) : 31-40 https://doi.org/10.1007/s11708-014-0296-8

RESEARCH ARTICLE

Electricity demand, GDP and employment: evidence from Italy

Cosimo MAGAZZINO(

)

Department of Political Sciences, Roma Tre University, via G. Chiabrera 199, 00145 Rome, Italy

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Abstract

This paper applies time series methodologies to examine the causal relationship among electricity demand, real per capita GDP and total labor force for Italy from 1970 to 2009. After a brief introduction, a survey of the economic literature on this issue is reported, before discussing the data and introducing the econometric techniques used. The results of estimation indicate that one cointegrating relationship exists among these variables. This equilibrium relation implies that, in the long-run, GDP and labor force are correlated negatively, as well as GDP and electricity. Moreover, there is a bi-directional Granger causality flow between real per capita GDP and electricity demand; while labor force does not Granger-cause neither real per capita GDP nor electricity demand. This implies that electricity demand and economic growth are jointly determined at the same time for the Italian case. The forecast error variance decomposition shows that forecast errors in real per capita GDP are mainly caused by the uncertainty in GDP itself, while forecast errors in labor force are mainly resulted from the labor force itself, although aggregate income and electricity are important, too.

Keywords energy policies electricity demand GDP labor force stationarity structural breaks cointegration causality Italy

Corresponding Author(s): Cosimo MAGAZZINO

Issue Date: 05 March 2014

Cite this article:

Cosimo MAGAZZINO. Electricity demand, GDP and employment: evidence from Italy[J]. Front. Energy, 2014, 8(1): 31-40.

URL:

https://academic.hep.com.cn/fie/EN/10.1007/s11708-014-0296-8
https://academic.hep.com.cn/fie/EN/Y2014/V8/I1/31

Tab.1 2012 electricity price comparison

Author(s)	Country	Time period	Causality
Abosedra et al. [21]	Lebanon	1995 − 2005	ED→Y
Acaravci and Ozturk [19]	Turkey	1968 − 2005	ED→Y
Aktaş and Yilmaz [47]	Turkey	1970 − 2004	Y↔ED
Altinay and Karagol [34]	Turkey	1950 − 2000	ED→Y
Aqeel and Butt [31]	Pakistan	1955 − 1996	ED→Y
Chandran et al. [40]	Malaysia	1971 − 2003	ED→Y
Chen et al. [13]	10 Asian countries and areas	1971 − 2001	China, Indonesia, Korea, China’s Taiwan, Thailand: Neutrality India, Malaysia, Philippines, Singapore: Y→ED China’s Hong Kong: ED→Y
Cifter and Ozun [46]	Turkey	1968 − 2002	Y↔ED
Ghosh [22]	India	1950 − 1997	Y→ED
Ghosh [23]	India	1970 − 2005	Y→ED
Halicioglu [35]	Turkey	1968 − 2005	ED→Y
Ho and Siu [36]	China’s Hong Kong	1966 − 2002	ED→Y
Jamil and Ahmad [29]	Pakistan	1960 − 2008	Y→ED
Jumbe [43]	Malawi	1970 − 1999	Y↔ED
Kraft and Kraft [3]	USA	1947 − 1974	Y→ED
Lean and Smyth [30]	Malaysia	1970 − 2008	Y→ED
Lean and Smyth [50]	Malaysia	1971 − 2006	Y↔ED
Lorde et al. [51]	Barbados	1960 − 2004	Y↔ED
Morimoto and Hope [44]	Sri Lanka	1960 − 1998	Y↔ED
Mozumder and Marathe [27]	Bangladesh	1971 − 1999	Y→ED
Murray and Nan [15]	15 countries	1970 − 1990	India, Philippines, Zambia: Neutrality Colombia, El Salvador, Indonesia, Kenya, Mexico: Y→ED Canada, Hong Kong, Pakistan, Singapore, Turkey: E→Y Malaysia, South Korea: Y↔ED
Narayan and Singh [37]	Fiji	1971 − 2002	ED→Y
Narayan and Smyth [24]	Australia	1966 − 2009	Y→ED
Odhiambo [49]	South Africa	1971 − 2006	Y↔ED
Ouédraogo [52]	Burkina Faso	1968 − 2003	Y↔ED
Ozturk and Acaravci [14]	4 Transition countries	1980 − 2006	Albania, Bulgaria, Romania: Neutrality Hungary: Y↔ED
Sarker and Alam [41]	Bangladesh	1973 − 2006	ED→Y
Shiu and Lam [32]	China	1971 − 2000	ED→Y
Squalli [28]	OPEC members	1980 − 2003	Algeria, Iraq, Kuwait, Libya: Y→ED Indonesia, Nigeria, UAE, Venezuela: ED→Y Iran, Qatar, Saudi Arabia: Y↔ED
Squalli and Wilson [16]	GCC countries	1980 − 2003	UAE: Neutrality Kuwait, Oman: Y→ED Bahrain, Qatar, Saudi Arabia: Y↔ED
Tang [48]	Malaysia	1972 − 2003	Y↔ED
Tang and Shahbaz [53]	Portugal	1971 − 2009	Y↔ED
Wolde-Rufael [33]	Shanghai, China	1952 − 1999	ED→Y
Wolde-Rufael [17]	17 African countries	1971 − 2001	Algeria, Kenya, Rep. Congo, South Africa, Sudan: Neutrality Cameroon, Ghana, Nigeria, Senegal, Zambia, Zimbabwe: Y→ED Benin, D.R. Congo, Egypt, Gabon, Morocco, Tunisia: ED→Y
Yang [42]	Taiwan	1954 − 1997	Y↔ED
Yoo [45]	South Korea	1970 − 2002	Y↔ED
Yoo [25]	4 South-East Asian countries	1971 − 2002	Indonesia, Thailand: Y→ED Malaysia, Singapore: Y↔ED
Yoo and Kim [26]	Indonesia	1971 − 2002	Y→ED
Yoo and Kwak [20]	7 South American countries	1975 − 2006	Peru: Neutrality Argentina, Brazil, Chile, Colombia, Ecuador: ED→Y Venezuela: Y↔ED
Yuan et al. [38]	China	1978 − 2004	ED→Y
Zachariadis and Pashouortidou [18]	Cyprus	1960 − 2004	Neutrality

Tab.2 A comparison of studies about causality analysis between electricity demand and GDP

Tab.3 List of variables

Fig.1 Real per capita GDP, electricity demand and total labor force in Italy (1970 − 2009, log-scale)

Tab.4 Exploratory data analysis

Tab.5 Descriptive statistics

Fig.2 Per capita GDP at constant prices, electricity demand and total labor force (Italy, 1970 − 2009)

Tab.6 Results of stationarity tests

Tab.7 Results of unit root tests with structural breaks

Tab.8 Results of additive outlier unit root tests

Tab.9 Results of co-integration tests among real per capita GDP growth, electricity demand and total labor force (Johansen and Juselius procedure, Rank= 1)

Tab.10 Results of short-run causality tests

Tab.11 Results of forecast error variance decomposition

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