Abstract:
Abstract-- This study attempts to shed light into the empirical
relationship between energy consumption and economic growth in
Sri Lanka (1981-2012) employing the vector error-correction model
estimation (VECM). The vector specification includes energy
consumption, real GDP and price developments, and the latter was
taken to represent a measure of economic efficiency. The empirical
evidence suggests that there is a long-run relationship among the
three variables, supporting the endogeneity of energy consumption
and real output. These findings suggest important policy
implications, since the adoption of suitable structural policies
aiming at improving economic efficiency can induce energy
consumption without impeding economic growth.
Keywords— Keywords: Energy consumption, Economic growth
and Vector error-correction model (VECM).
I. Introduction
