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The impact of public capital stock on energy consumption: Empirical evidence from Latin America and the Caribbean region

Abstract The impact of the stock of public capital on electricity consumption per capita is analysed for eighteen Latin American and Caribbean countries over the period ranging from 1971 to 2014. We rely on the ARDL approach to capture the complexity of short- and long-run relationships between the variables. The results support that the stock of public capital influences electricity consumption only on the short run, revealing that its impact is exerted mainly by an income effect that stimulates electricity consumption momently. The stock of public capital has no long-run impact on per capita electricity consumption, rising doubts on the quality of that public stock of capital to promote development. The modelling of the drivers of electricity consumption also revealed valuable insights into how the Latin American and Caribbean region has evolved. The availability of electricity generation only stimulates moderately per capita electricity consumption, supporting that the integration of Latin American and Caribbean grids that was able to disrupt the link between local generation and consumption. This conclusion is enforced by the no statistical significance of short-run impacts of the availability of electricity generation on per capita electricity consumption.
- University of Beira Interior Portugal
- University of Évora Portugal
- University of Coimbra Portugal
- University of Coimbra Portugal
- University of Évora Portugal
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