Abstract:
The sectorial relevance and direction of energy policy in the Ghanaian
economy as energy demand continue to rise with constant growth in services
and a steady decrease in manufacturing growth, requires empirical analysis of
the relationship between electricity generation and economic growth. This
study analyses time series data from 1983 to 2015 to examine long run
cointegration between electricity generation and economic growth using
Autoregressive Distributed Lag Model (ARDL) bounds testing of cointegration
and Granger causality. We find that in the long run electricity generation
affects economic growth. We establish a feedback effect between electricity
generations to economic growth. The policy implication is that as more
investments are made in the electricity sector, it will boost economic growth
which will lead to more investments in the energy sector for further growth.
