The Policy Implications of the Relationship between Energy Consumption, Energy Intensity and Economic Growth in Ghana

Abstract

The 19739/74 and 1979/1980 oil price shocks coupled with the unreliability of its supply as against the ever‐increasing demand for energy‐based inputs, further reinforced the stern implications that energy may have on economic development reducing energy intensity is often advocated as a way to ensure efficient utilisation of energy resources and minimising the adverse effects of its shortage on economic development. Using the annual time series data set spanning 1981–2014 this study examined, in Ghana where energy crises continue to immense adverse effects on the economy, the relationships between energy consumption and economic growth at the one hand, and that between energy intensity and economic growth on the other hand within the standard Environmental Kuznets Curve framework. In Autoregressive Distributed Lagged model estimation, there was strong evidence of the existence of a valid long‐run relationship between energy consumption and economic growth as well as energy intensity and economic growth.