CAUSALITY RELATIONSHIP BETWEEN ELECTRICITY CONSUMPTION AND ECONOMIC GROWTH: INVESTIGATION FOR AZERBAIJAN, KAZAKHSTAN AND KYRGYZSTAN

Abstract

This research examines the causality relationship between electricity (energy) consumption and economic growth for Azerbaijan, Kazakhstan and Kyrgyzstan. The data set used in the research covers the years 1992-2015. Hacker and Hatemi-J (2006) for the non-asymmetric causality analysis and Hatemi-J (2012) for the asymmetric causality analysis were used as the research method. According to the results of the non-asymmetric causality analysis, while the Neutrality Hypothesis is supported for Azerbaijan and Kazakhstan, the Conservation Hypothesis for Kyrgyzstan is supported. However, according to the results of asymmetric causality analysis, while the Neutrality Hypothesis is supported for Azerbaijan in both positive and negative shocks, this hypothesis is supported by negative shocks in Kazakhstan and Growth Hypothesis is supported in positive shocks. In Kyrgyzstan, the Conservation Hypothesis is supported in negative shocks and the Neutrality Hypothesis remains supported in positive shocks. According to this, energy conservation policies have no effect on Azerbaijan's economic growth. However, it is seen that electricity (energy) consumption increases economic growth in Kazakhstan and that economic growth will increase with the increase of electricity (energy) consumption in Kyrgyzstan. This shows that in the electricity (energy) consumption of these countries, more effective results can be obtained by taking into account the positive and negative shocks and the determination of energy policies in economic development processes.