Does Domestic Energy Consumption Contribute to Exports? Empirical Evidence From Nigeria.

Abstract

This paper examined the existence of interaction between domestic energy consumption and exports in Nigeria by using annual data from 1970 to 2009. We applied cointegration, Granger causality and impulse response functions to capture the relationship. The empirical results indicate that there is significant relationship between domestic energy consumption and exports in the long run. Granger causality tests showed that there is unidirectional causality running from energy consumption to exports. Impulse response functions indicate that shocks to the energy consumption have a positive impact on exports in the longrun. Likewise, expansions on exports were positively related to energy consumption. Therefore, significant improvement in energy production and utilization is expected to stimulate exports and engender economic growth in Nigeria.

Keywords

• Energy, domestic energy consumption, exports, cointegration, causality, Nigeria