The electricity consumption, employment and growth nexus: evidence from Lebanon

Abstract

The causal relationship between electricity consumption and growth in Lebanon is examined using aggregate employment in a trivariate setting for the period 1980–2011. We test the main hypothesis that electricity is an input in the aggregate production function. Our results reject the input hypothesis in Lebanon in both the short run and long run. However, electricity is found to be a by-product only when we employ a stronger test for Granger causality. These results seem to suggest that electricity conservation strategies should be easier to implement without additional sacrifices to growth in Lebanon. By contrast, we find evidence of a long-run relationship between employment and growth. We offer some specific detailed strategy to Lebanon that provides support for carrying out policies that increase the level of labour-promoting investments in the country.