Electricity Consumption, Financial Development and Economic Growth: an Empirical Analysis of the Situation In Croatia
Project leader
Pavle Jakovac, PhD, Assistant Professor
Project team members
1) Full prof. Mario Pečarić, PhD. (Faculty of Economics and Business, Rijeka; Faculty of Economics, Business and Tourism, Split)
2) Ass.prof. Dejan Bodul, PhD. (Faculty of Law, Rijeka)
3) Ivan Prudky, MEcon. (Faculty of Economics and Business, Rijeka; PhD student at Faculty of Economics and Business, University of Maribor, Slovenia)
4) Dražen Laštro, MEcon. (PhD student at Faculty of Economics and Business, Rijeka)
Summary
The development of modern society cannot be imagined without electricity as an ubiquitous and almost irreplaceable energy source. Energy is a key factor in human development, it provides a standard of living and enables the economy to grow, with electricity being one of its most important forms. In the modern world, efficient energy supply, particularly electricity as its most flexible, commercial and cleanest form represents an important basis for economic growth and development. Although research of the causal link between electricity consumption, financial development and economic growth has been represented in the scientific literature for the last 20 years, the results are still contradictory. Increase in the availability of data by using additional control variables in a multivariate framework and by using newer econometric methods, opens the possibility for researchers to gain a more in-depth insight into the causal link between the mentioned variables, making the results more robust and representative. Therefore, studying the causal relationship and economic effects of the mentioned variables represents an important and challenging research task. A detailed review of the empirical research carried out so far, shows that this particular topic has not been systematically investigated and addressed in Croatia. This fact is the basic motive for choosing the theme of this project. The aim of this research is to determine the direction and intensity of the causal relationship between electricity consumption, financial development and GDP within a multivariate framework. The econometric analysis will be conducted using the conventional multifactor neoclassical aggregate production function and an appropriate set of quantitative methods. The project’s findings will also shed light on the role of financial sector development in electricity infrastructure development, and in particular, whether a well-developed financial sector drives electricity demand in Croatia.
Keywords
electricity consumption, financial development, economic growth, Croatia
