The causal relationship between energy consumption and economic growth in Lebanon

Project description

This paper investigates the dynamic causal relationship between energy consumption and economic growth in Lebanon over the period 1980–2009. Within a bivariate framework, imposed on us due to data limitations, and in an effort to increase the robustness of our results, we employ a variety of causality tests, namely, Hsiao, Toda-Yamamoto, and vector error correction based Granger causality tests. We find strong evidence of a bidirectional relationship both in the short-run and in the long-run, indicating that energy is a limiting factor to economic growth in Lebanon. From a policy perspective, the confirmation of the feedback hypothesis warns against the use of policy instruments geared towards restricting energy consumption, as these may lead to adverse effects on economic growth. Consequently, there is a pressing need to revise the current national energy policy that calls for a 5% energy conservation target. Also, to shield the country from external supply shocks, given its substantial dependence on energy imports, policymakers should emphasize the development of domestic energy resources. Further, the most pertinent implication is that relaxing the present electric capacity shortages should be made a national priority, in view of its potential positive effect on the economy.

Researchers

First name Last name Gender Rank Affiliated Institution Country
Leila Dagher Male American University of Beirut Lebanon

Bio:

Website

 

Scientific field

Economics
 

Start Year

2008
 

End Year

2011
 

Social impact

Are you interested in disseminating your research work outside the academic institutions?

No

Are there institutions/organizations contacted you to disseminate your research project?

No

How did you disseminate your research work outside academic institutions?

Workshops

What obstacles have you faced as you tried to facilitate the social impact of your research?

Time availability