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Abstract

Kenya is a small open economy that depends on energy for growth. Since independence in 1963, it has experienced tremendous urban and rural population growth, placing an increasing strain on energy resources and economic development. Therefore, in this paper the relationship between urban and rural populations, economic development, and energy use is studied. The empirical analysis uses a vector autoregression framework. The Granger Causality test results suggest unidirectional causality running from urban population to GDP. The vector error decomposition results imply that urban growth will continue to play a major role in energy consumption in Kenya.

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