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Abstract
This study investigates the causal relationship between energy consumption and economic growth in Nigeria for the period of 1981-2018. Total energy consumption is disaggregated into four subcategories (i.e., electricity power consumption, fuel pump price, energy capital formation, coal energy consumption) in an attempt to examine whether the links between energy consumption, and economic growth differs among the various sources of energy consumption. The study after conducting unit root test and cointegration employs granger causality test. The results of unit root test and cointegration test show that all variables are stationary at first difference, while there exist long run relationship among the variables in the model respectively. The granger causality result revealed the absence of bi-directional causality between the energy consumption variables and growth. This means that causality does not run from energy consumption to economic growth as well as economic growth to energy consumption. Apparently, there is empirical evidence of unidirectional causality between Elect_P and GDPg not in reverse direction. In general, it can be safely concluded that there is an evidence of a long-run causality between energy consumption variables and growth in Nigeria but run from energy consumption variables (electricity power consumption) to economic growth. This result lends support to the electricity-growth hypothesis in Nigeria. It is therefore recommended that government should encourage more access to energy diversifications and consumption as a primary source of value for factors of production i.e. labor and capital which we cannot do without.