Electricity and growth nexus dynamics in Singapore: Fresh insights based on wavelet approach

This study examines the empirical relationship of electricity generation (EGEN) and economic growth (IPI) in Singapore by using the flexible properties of the wavelet approach. This innovative technique allows the decomposition of time-series across time scales. In this study, we used continuous wavelet transform, cross wavelet and wavelet coherence ratios to investigate the relationship between EGEN and IPI by using the monthly data from 1983(1) to 2016(1). Results of autoregressive distributed lag and Johansen Juselius cointegration tests show that there is a significant long-run relationship the mentioned variables in Singapore. Furthermore, results indicate that there is a unidirectional causal relationship running from EGEN to IPI in the long run while a bidirectional causal interplays are depicted between the of EGEN on IPI in medium run. Thus it can be recommended that government needs to increase electricity generation and further providing and nurturing the expansion of electricity supply in country which will ultimately benefits the economic growth.