Modelling and Forecasting of Some Energy Growth Indicator Variables in Ethiopia Via a Multivariate VAR Model

Energy is the heart of the most critical economic, environmental, and developmental issues. Ethiopia is aggressive working to produce electrical energy from hydroelectric sources. However, currently, the net energy imports and power losses also increase. Therefore, this study aims to investigate the relationship between energy growth indicators in Ethiopia by using a VAR time series model. A time series technique using annual data for the period 1971 to 2015 from the World Bank was utilized VAR. (1) One model result lagged electricity production from hydroelectric sources is significantly explained by one period lagged values of itself. Furthermore, the result indicates that electric power consumption explained in a period. The forecast error variance decomposition result indicates that most of the variations in the series were explained by their shock in the first horizon. In the short?run, electricity production had a positive significant effect on consumption in Ethiopia. On the basis of these results, it is recommended that the government and manager work together to increase stable consumption opportunities but should reduce energy import and electric power losses.