MULTIVARIATE GRANGER CAUSALITY BETWEEN ECONOMIC GROWTH, ELECTRICITY CONSUMPTION, EXPORTS AND REMITTANCE FOR THE PANEL OF THREE SAARC COUNTRIES

Abstract

This paper empirically examines the dynamic causal relationship between economic growth, electricity consumption, export values and remittance for the panel of three SAARC countries using the time series data for the period 1976- 2009. Using four different panel unit root tests it is found that all the panel variables are integrated of order 1. From the Johansen Fisher panel conintegration and Kao tests it is found that all the panel variables are cointegrated. The panel Granger F test results support that there is only bidirectional short-run causal relationship between economic growth and export values but there is no evidence of long-run causal relationship. It is found that the long-run elasticity of economic growth with respect to electricity consumption and remittance are higher than short run elasticity. This means that over time higher electricity consumption and higher remittance from manpower supply in the panel of SAARC countries give rise to more economic growth.