Abstract:
This research purposes to examine the bond between
consumption of energy and gross domestic product of Sri Lanka
over the period of time 1980 to 2017. To find the order of
integration The Augmented Dicky-Fuller (ADF) and Phillips
Perron (PP) unit root tests have used. Study examines long-run
relationship through the application of Johanson Cointegration
techniques. Dependent variable of this study is Gross Domestic
Products (GDP) whereas gross capital formation, inflation, oil,
gas, and electricity consumption are independent variables. This
research has used secondary data and collected data is analyzed
by using EViews 10 statistical software. According to the findings,
gas consumption has statistically significant negative relationship
to the GDP of Sri Lanka whereas labor force, gross capital
formation, consumption of electricity and oil are statistically
significant positive relationship with GDP. According to the
Granger causality findings bi-directional causality exists in oil,
gas and electricity consumption in Sri Lanka. This results reveal
that consumption of electricity, gas and oil lead to GDP and GDP
leads to electricity, gas and oil consumption. Oil and Gas implies
the unidirectional causality with electricity. But, oil and gas have
no causality in Sri Lanka. Hence, this paper concluded that
consumption of energy has a statistically significant relationship
with the gross domestic product of Sri Lanka. Thus, this study
suggested that Sri Lanka should utilize energy consumptions in
the manufacturing and commercial industries to achieve
sustainable growth.
