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Modelling the causal linkages among residential electricity consumption, gross domestic product, price of electricity, price of electric appliances, population and foreign direct investment in Malaysia

Author

Listed:
  • Lee Lian Ivy-Yap
  • Hussain Ali Bekhet
Abstract
Residential electricity consumption in Malaysia is increasing rapidly and effective measures are urgently needed to contain its rapid growth to achieve better energy security. The current paper attempts to investigate the multivariate Granger causalities and dynamic responses of residential electricity consumption in Malaysia for the 1978-2013 period. In the long run, all the determinants of residential electricity consumption (real disposable income, price of electricity, price of electric appliances, population and foreign direct investment) Granger cause it but in the short run, only the price of electric appliances and population do so. The response of residential electricity consumption to shocks alternates between positive and negative but diminishes with time. In addition to own shocks, shocks to the price of electricity contribute most of the variance in residential electricity consumption. The study shows that pricing policies are effective in reducing residential electricity consumption. As fossil fuels are finite, careful planning of energy consumption is necessary to safeguard energy security.

Suggested Citation

  • Lee Lian Ivy-Yap & Hussain Ali Bekhet, 2016. "Modelling the causal linkages among residential electricity consumption, gross domestic product, price of electricity, price of electric appliances, population and foreign direct investment in Malaysi," International Journal of Energy Technology and Policy, Inderscience Enterprises Ltd, vol. 12(1), pages 41-59.
    • Handle: RePEc:ids:ijetpo:v:12:y:2016:i:1:p:41-59
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    Cited by:

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    2. Nor Salwati Othman & Hussain Ali Bekhet, 2021. "Dynamic Effects of Malaysia's Government Spending on Environment Quality: Bridging STIRPAT and EKC Hypothesis," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 343-355.
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    4. Bekhet, Hussain Ali & Othman, Nor Salwati, 2018. "The role of renewable energy to validate dynamic interaction between CO2 emissions and GDP toward sustainable development in Malaysia," Energy Economics, Elsevier, vol. 72(C), pages 47-61.

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