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Human capital and export diversification as new determinants of energy demand in the United States

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  • Shahbaz, Muhammad
  • Gozgor, Giray
  • Hammoudeh, Shawkat

Abstract

This paper investigates how education and export diversification contribute to energy demand by also incorporating the role of natural resource, oil prices and income in driving energy demand function for the United States (U.S.) economy. In doing so, we apply the unit root test of Kim and Perron (2009) and the bootstrapping autoregressive-distributed lag (ARDL) cointegration approach developed by McNown etal. (2018), which accommodates the presence of a single unknown structural break in the series. The empirical results confirm that the variables are cointegrated in a long-run relationship. Education is negatively linked to energy demand, and export diversification also decreases this demand in the long-run. On the other hand, economic growth increases energy consumption, while oil prices reduce energy demand in the long-run. Natural resource production affects energy consumption positively. Further, the Vector Error Correction Mechanism (VECM)'s Granger causality analysis reveals a feedback effect between education and energy demand. Export diversification causes energy demand, and in return, energy demand causes export diversification. A bidirectional causality also exists between economic growth and energy demand. The paper also discusses the potential implications of the results.

Suggested Citation

  • Shahbaz, Muhammad & Gozgor, Giray & Hammoudeh, Shawkat, 2019. "Human capital and export diversification as new determinants of energy demand in the United States," Energy Economics, Elsevier, vol. 78(C), pages 335-349.
    • Handle: RePEc:eee:eneeco:v:78:y:2019:i:c:p:335-349
    DOI: 10.1016/j.eneco.2018.11.016
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    More about this item

    Keywords

    Energy demand; Education; Export diversification; Oil prices; Natural resources;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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