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Advisor(s)
Abstract(s)
This paper uses monthly data for the time span 2006:M01 to 2014:M06, to study
the relationship between electricity generation regimes, both ordinary and special,
and economic activity in Portugal. An autoregressive distributed lag bounds
test approach is pursued to analyse the short- and long-run dynamics between
renewable/non-renewable electricity sources and industrial production. Results
show that both ordinary thermal sources and hydro sources are driving forces
behind electricity from the special regime. Economic activity is stimulating the
special regime, but, conversely, the special regime hampers the growth of industrial
production. It is demonstrated that a crucial role is being played by large-scale
hydropower in accommodating the special regime in the electricity mix. This
source is causing economic activity, while at the same time, backing up new renewable
sources.