Structural breaks, electricity consumption and economic growth: Evidence from Ghana

This study examines the causal relationship between electricity consumption and economic growth for Ghana during the period 1970 to 2010. The study employed unit root and cointegration tests taking into account structural breaks. The following findings were made: First, a plot of the series indicated a trend pattern. The series also experienced structural breaks in 1979 and 1983 but after taking structural breaks into account they became stationary. Second, the series exhibited one cointegration vector implying a long–run relationship between them. Third, the results revealed the presence of unidirectional Granger causality running from economic growth to electricity consumption. In general, the study identified the presence of structural break dates which corresponded with the critical economic events in Ghana. Key words: Electricity consumption, economic growth, structural break, vector error correction mode (VECM), causality