Browsing by Author "Wondimaghegn, Mehari"

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    Energy and Economic Growth in Ethiopia: Granger Causality Approach
    (Addis Ababa University, 2011-06) Wondimaghegn, Mehari; Birhanu, Wassie (PhD)
    The aim of this paper is to re-examine the causal relationship between energy consumption and economic growth in Ethiopia using annual data from 1981 to 2006, in a multivariate framework by including labor and capital as additional variables. We apply the Granger causality test, variance decomposition analysis and Generalised impulse response analysis in linear multivariate models to evaluate how important is the causal impact of energy consumption on economic growth relative to labor and capital. The results give the evidence of causality running from economic growth to energy consumption. The variance decomposition analysis reveals that energy was no more than a minor contributing factor to output growth and certainly not the most important one when compared to capital and labor. Capital and labor are the most important factors in output growth in Ethiopia.