Electricity Consumption, Employment and Real Income in Australia

This paper has two objectives. The first is to ascertain whether there is a stationary, long run equilibrium relationship between electricity consumption, employment and income in Australia. The second is to examine the temporal causality between these variables. Our main findings are that electricity consumption, employment and real income are cointegrated and that in the long run employment and real income Granger cause electricity consumption, while in the short-run there is weak unidirectional Granger causality running from income to electricity consumption and from income to employment. The paper discusses the implications of these findings for energy conservation policies in Australia, which are designed to reduce greenhouse emissions and to move towards generating electricity from renewable resources.