Energy use and economic performance in Nigeria: an empirical study from petroleum, electricity and dry natural gas

Arguably, energy plays a vital role in economic and social development. Hence, many studies have attempted to test for the direction of causality between energy use and economic performance; however, no consensus has emerged. This research, therefore, tests for causal relationship between energy use and economic performance proxied by GDP(Gross Domestic Product) in Nigeria using systematic econometric techniques. Empirical literature on causality is examined by the study. The study found that there is a bi-directional causality between economic performance and energy use in the short run. However, in the long run, the relationship between the variables is unidirectional; flowing from energy use to economic performance. The policy implications derived from this study are that: before policy makers adopt any strategy to conserve, or to promote energy consumption, the role of energy use should not be neglected in the relationship between energy use and economic performance. Otherwise, such a policy may be detrimental to economic growth. Also any negative shock to energy use in the short run would inversely affect economic performance and vice versa.