While bond yields have rocketed in the other direction: At 13% of GDP, government debt is pretty low.
The pair-wise Granger causality tests are carried out to identify the direction of causation between GDP growth and electricity consumption.
When we look in the other direction, however, the impact of GDP growth on debt is negative 12 times (Australia, Austria, Belgium, Denmark, Finland, Germany, Greece, Ireland, Italy, Japan, Netherlands, and Sweden) and is not statistically different from zero in the eight other countries (Canada, France, New Zealand, Norway, Portugal, Spain, the UK and the US).
But the numbers are at least starting to move in the right direction: from a peak of 59% of GDP last December it fell to 56% in June.
Even a year ahead, the average error (in either direction) in recent years has been 1.2% of GDP; four years ahead, it rises to 4.1% of GDP, or £42 billion (see chart).
Germany, the E.U.'s largest economy is heading in the direction of a technical recession as GDP looks to contract in the second straight quarter.
After determining the direction of causality between electricity consumption and GDP growth, we proceed further to examine dynamic causal relationships between sectoral output growth and electricity consumption.
The major economic components of GDP need to be examined not only for trend and direction but for amplitude of movement.
The U.S. current account deficit (red, as share of GDP) and the unemployment rate (blue) tend to move in opposite directions.
GDP growth reflects the direction of economic progress.
