An Econometric Investigation of the Determinants of Fossil Fuel Consumption: A Multivariate Approach for Ghana
Samuel Yeboah Asuamah
Business School, Accra Institute of Technology (AIT), Accra, Ghana
Department of Economics, Kwame Nkrumah University of Science and Technology (KNUST), Kumasi, Ghana
Keywords: Fossil fuel, Consumption determinants, Long run and short run elasticities, Cointegration link, Income, Price, ARDL bound approach, Stability test, Non structural break.
The study examines the long run and short run determinants of fossil fuel consumption in Ghana for 1970-2011 period by using Autoregressive distributed lad model (ARDL). The bound test for cointegration produced no evidence of cointegration among the variables. There are no statistical significant long run and short run parameters for the fossil fuel consumption function for Ghana. The results suggest macro variables such as income, price, trade openness, investment, money supply, and government expenditure do not play observable role in fossil fuel consumption. As such, they could not be relied on as a policy tool to manage fossil fuel consumption. Future study should consider the issue of structural breaks and the direction of causality.