Electricity consumption and economic growth: evidence from Spain

The paper investigates both linear and nonlinear causality between electricity consumption and economic growth in Spain for the period 1971-2005. We use the methodology of Toda and Yamamoto (1995) and Dolado and Lütkepohl (1996). We also apply the standard Granger causality tests in a VAR for the series in first differences to achieve stationarity. The results are similar with both methodologies, which shows their robustness. We find unidirectional linear causality running from real GDP to electricity consumption. On the contrary, we find no evidence of nonlinear Granger causality between the series in either direction.First author would like to acknowledge the financial support provided by Ministerio de Educación y Ciencia under research grant BEC2003-02084. Second author would like to acknowledge the financial support provided by Ministerio de Educación y Ciencia under research grant SEJ2004-04811