engleski

GDP, Electricity Consumption and Financial Development in Croatia: an Empirical Analysis

The development of modern society cannot be imagined without electricity as a ubiquitous and almost irreplaceable energy source. Energy is a key factor in human development, it provides a standard of living and enables the economy to grow, with electricity being one of its most important forms. In the modern world, efficient energy supply, particularly electricity as its most flexible, commercial and cleanest form represents an important basis for economic growth and development. Although research of the causal link between electricity consumption, financial development and economic growth has been represented in the scientific literature for the last 20-30 years, the results are still contradictory. However, this particular topic has not been systematically investigated and addressed in Croatia. Therefore, studying the causal relationship and economic effects of the mentioned variables represents an important and challenging research task. The purpose of this paper is to determine the interconnectedness of electricity consumption, financial development and economic activity in Croatia. This will be achieved by analysing the available data for the last two and a half decades using the so-called bootstrap approach. According to the empirical results, causality runs from real GDP to total electricity consumption and from financial development to real GDP. In addition to empirical results, policy implications and recommendations for future research will also be presented in the paper.

economic growth, electricity consumption, financial development, bootstrap simulation technique, Croatia

This paper was funded under the project line ZIP UNIRI of the University of Rijeka, for the project ZIP- UNIRI-130-7-20