The nonlinear impact of electricity consumption on economic growth: Evidence from Thailand

Abstract

Since the structural change has generally occurred along the economic growth path, the nonlinear impact of non-renewable and renewable electricity consumption on the economic development of Thailand is concerned in this study. To deal with this structural change, the Markov Switching Autoregressive Distributed Lag (MS-ARDL) is adopted to characterize the regime-switching change for both electricity consumption on economic development in both the long and short runs. The results of long-run estimate show that the influence of renewable electricity consumption on economic growth is negative in the expansion regime, but it is positive in recession regime 2. However, the impact of non-renewable electricity consumption on growth is positive only in the expansion regime. Notably, the impacts of non-renewable and renewable electricity consumption are asymmetric on the economic development between the two regimes. They are convergent in the long run as the speed of adjustments is less than zero and significant in both regimes.