Title:
CAUSALITY RELATIONSHIP BETWEEN ELECTRICITY CONSUMPTION, ECONOMIC GROWTH, INEQUALITY AND POVERTY IN INDONESIA 1971–2019

Authors:
Alfiany Erdi Fadhilah, Suryanto, Mulyanto, Indonesia

Abstract:

This study investigates the long-run relationship and causality between electricity consumption, economic growth, poverty and inequality in Indonesia from 1971 to 2019. This study employs Cointegration Test and Granger Causality Test. The cointegration test revealed a long-run relationship between variables at a 5% level in Indonesia. The Granger causality test showed that there is no causal relationship between electricity consumption and economic growth. The granger causality test also revealed a one-way relationship between electricity consumption and poverty and a one-way relationship between electricity consumption and inequality, not vice versa. This research can be used as a reference in determining electricity subsidy policies and the use of renewable energy.