A VARX modelling of energy intensity interactions between China, the United States, Japan and EU

This study attempts to predict energy intensity interactions between China, the United States, Japan and EU by developing a restricted VARX model by proposing energy intensities of the countries interact with each others, and gross domestic product (GDP) levels per capita and Organization of Petroleum Exporting Countries (OPEC) oil-based current energy prices affect energy intensities of the countries based upon the direction of group causalities. There exist significant causal interactions between energy intensities of the countries up to lag five either increasing efficiency or not. China's current GDP level affects its own energy use and EU's energy intensity positively, on the other way; EU's current GDP level affects only China's energy intensity while Japan's current GDP level only affects its own energy intensity negatively, ceteris paribus. It is found that OPEC oil-based current energy prices only affect the United States' energy intensity but not others' energy intensity, ceteris paribus, for the period of 1971–2009. Evaluating cumulative effects of energy intensities of all countries, it is found that each country has experienced higher energy intensity and consumed energy less efficiently even there have been existing new technology-embodied equipments used and alternative energy sources developed in energy consumption for the years.