Journal
ENERGY ECONOMICS
Volume 32, Issue 6, Pages 1411-1420Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.eneco.2010.05.011
Keywords
Barbados; Electrical energy consumption; Economic growth
Categories
Ask authors/readers for more resources
Using a neo-classical aggregate production model where capital, labour, technology, and energy are treated as separate inputs, this paper tests for the existence and direction of causality between output growth and electrical energy use in Barbados, analysed as a whole and in sectors respectively. Results indicate the presence of a long-run relationship between growth and electricity consumption; specifically we find that the non-residential sector is a key driver of growth. In addition, the evidence reveals a bidirectional causal relationship between electrical energy consumption and real GDP in the long run, but only a unidirectional causal relationship from energy to output in the short run. Forecasts indicate increasing consumption of electrical energy, particularly by the residential sector. We suggest that plans by the Government to liberalise the sector should encourage efficiency and innovation in production and distribution which should result in lower prices, as independent suppliers compete to maintain their market shares. Changes in the regulatory environment will also be necessary if such plans materialise. Policymakers will need to pay greater attention to the expected increase in the rate of consumption by the residential sector, as this will help to reduce the imports of oil and depletion of scarce foreign exchange resources by a sector that does not spur economic growth. An increase in energy capacity should be encouraged as contingency planning in the event of a technical or political disruption to fuel imports will be critical, notwithstanding the drive to use more renewable sources of energy. (C) 2010 Elsevier B.V. All rights reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available