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The Relationship Between Economic Growth and Electricity Consumption: Bootstrap ARDL Test with a Fourier Function and Machine Learning Approach

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Abstract

In this study, the relationship between electricity and growth of the economy is investigated by applying the newly-developed bootstrap autoregressive-distributed lag test with a Fourier function to examine both the causality and cointegration for China, India, and the United States (US). While it is not possible to detect a long-term cointegration relation among the economy's electricity and growth, the study findings demonstrate the contingency of the causality. The ensemble method in machine learning performs better than conventional methods as electricity is an independent indicator for forecast economics. Concerning the US, previous electricity consumption has a positive impact on the current nature of economic growth. In contrast, the consumption of electricity is negatively affected by the development of the economy. However, for China and India, positive and negative feedback can be observed, respectively. Due to the increased awareness of the environment's adverse effects, China should promote technologies that conserve energy and boost energy efficiency to achieve sustainable development in both environmental and economic terms. In India's context, broadening access to electricity has significance for residents in rural areas and enhances economic growth. It is recommended that policy-makers promote innovative technologies in the US, as the abundant natural and human resources can make valuable contributions to the society and development of the economy.

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Acknowledgements

We thank the anonymous reviewers for their careful reading of our manuscript and their many insightful comments and suggestions. We thank resources from Research Center of Hubei Logistics Development, Hubei University of Economics, and Wuchang University of Technology.

Funding

Hubei University of Economics with the grant number of XJ201901; XJ201902;11024225.

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Authors and Affiliations

  1. School of Business Administration, Hubei University of Economics, Wuhan, Hubei Province, China

    Cheng-Feng Wu

  2. School of Business, Wuchang University of Technology, Wuhan, Hubei Province, China

    Cheng-Feng Wu

  3. Research Center of Hubei Logistics Development, Hubei University of Economics, Wuhan, Hubei Province, China

    Cheng-Feng Wu

  4. Department of Business Administration, National Changhua University of Education, Changhua City, Taiwan

    Shian-Chang Huang

  5. Department of Accounting, National Changhua University of Education, Changhua City, Taiwan

    Chei-Chang Chiou

  6. Department of Finance, Feng Chia University, Taichung, Taiwan

    Tsangyao Chang

  7. CTBC Business School, Tainan, Taiwan

    Tsangyao Chang

  8. Graduate School of Technological and Vocational Education, National Yunlin University of Science and Technology, Douliu, Taiwan

    Yung-Chih Chen

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  1. Cheng-Feng Wu
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Contributions

C-FW contributed to the research topic, model, data collection, coding, and writing. S-CH contributed to the literature reviewing, writing, and developed implications. C-CC edited this manuscript, developed implications, and responsible for correspondence. TC and Y-CC contributed to results analysis, literature reviewing, and editing.

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Correspondence to Chei-Chang Chiou.

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Wu, CF., Huang, SC., Chiou, CC. et al. The Relationship Between Economic Growth and Electricity Consumption: Bootstrap ARDL Test with a Fourier Function and Machine Learning Approach. Comput Econ 60, 1197–1220 (2022). https://doi.org/10.1007/s10614-021-10097-7

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