IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v254y2022ipas0360544222011847.html
   My bibliography  Save this article

Reactions of energy intensity, energy efficiency, and activity indexes to income and energy price changes: The panel data evidence from OECD countries

Author

Listed:
  • Gorus, Muhammed Sehid
  • Karagol, Erdal Tanas

Abstract

Energy has had an important effect on the economic growth process of the countries for decades. Therefore, it has received attention from practitioners in the empirical literature of energy economics. This study aims to explore the factors affecting energy intensity, energy efficiency, and activity indexes for 27 OECD countries during the period 1980–2018. For this purpose, the study constructs the energy indexes through the decomposition analysis based on the Fisher ideal index. Then, per capita gross domestic product and energy prices index are used as a proxy for income and energy prices. In this study, the authors conduct recent panel data techniques that take into consideration the cross-sectional dependence. The empirical results of this paper exhibit that income affects both the energy intensity index and the energy efficiency index negatively for most countries. In contrast, its effect on the activity index varies across countries. Besides, it is found that energy prices’ impact on these three indexes is mixed; economies reacted to the change in prices differently due to their country-specific characteristics. These empirical findings suggest several courses of action for policymakers.

Suggested Citation

  • Gorus, Muhammed Sehid & Karagol, Erdal Tanas, 2022. "Reactions of energy intensity, energy efficiency, and activity indexes to income and energy price changes: The panel data evidence from OECD countries," Energy, Elsevier, vol. 254(PA).
    • Handle: RePEc:eee:energy:v:254:y:2022:i:pa:s0360544222011847
    DOI: 10.1016/j.energy.2022.124281
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544222011847
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2022.124281?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Boyoon Chang & Sung Jin Kang & Tae Yong Jung, 2019. "Price and Output Elasticities of Energy Demand for Industrial Sectors in OECD Countries," Sustainability, MDPI, vol. 11(6), pages 1-17, March.
    2. Joakim Westerlund & David L. Edgerton, 2008. "A Simple Test for Cointegration in Dependent Panels with Structural Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(5), pages 665-704, October.
    3. Filipović, Sanja & Verbič, Miroslav & Radovanović, Mirjana, 2015. "Determinants of energy intensity in the European Union: A panel data analysis," Energy, Elsevier, vol. 92(P3), pages 547-555.
    4. Prosser, Richard D., 1985. "Demand elasticities in OECD : Dynamical aspects," Energy Economics, Elsevier, vol. 7(1), pages 9-12, January.
    5. Ziramba, Emmanuel, 2010. "Price and income elasticities of crude oil import demand in South Africa: A cointegration analysis," Energy Policy, Elsevier, vol. 38(12), pages 7844-7849, December.
    6. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    7. Brantley Liddle and Hillard Huntington, 2020. "Revisiting the Income Elasticity of Energy Consumption: A Heterogeneous, Common Factor, Dynamic OECD & non-OECD Country Panel Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 207-230.
    8. Jimenez, Raul & Mercado, Jorge, 2014. "Energy intensity: A decomposition and counterfactual exercise for Latin American countries," Energy Economics, Elsevier, vol. 42(C), pages 161-171.
    9. Francis Teal & Markus Eberhardt, 2010. "Productivity Analysis in Global Manufacturing Production," Economics Series Working Papers 515, University of Oxford, Department of Economics.
    10. Ang, B.W. & Liu, F.L. & Chung, Hyun-Sik, 2004. "A generalized Fisher index approach to energy decomposition analysis," Energy Economics, Elsevier, vol. 26(5), pages 757-763, September.
    11. Adewuyi, Adeolu O., 2016. "Determinants of import demand for non-renewable energy (petroleum) products: Empirical evidence from Nigeria," Energy Policy, Elsevier, vol. 95(C), pages 73-93.
    12. Eberhardt, Markus & Teal, Francis, 2008. "Modeling technology and technological change in manufacturing: how do countries differ?," MPRA Paper 10690, University Library of Munich, Germany.
    13. Altinay, Galip, 2007. "Short-run and long-run elasticities of import demand for crude oil in Turkey," Energy Policy, Elsevier, vol. 35(11), pages 5829-5835, November.
    14. Tajudeen, Ibrahim A. & Wossink, Ada & Banerjee, Prasenjit, 2018. "How significant is energy efficiency to mitigate CO2 emissions? Evidence from OECD countries," Energy Economics, Elsevier, vol. 72(C), pages 200-221.
    15. Liu, F. L. & Ang, B. W., 2003. "Eight methods for decomposing the aggregate energy-intensity of industry," Applied Energy, Elsevier, vol. 76(1-3), pages 15-23, September.
    16. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    17. Liddle, Brantley & Smyth, Russell & Zhang, Xibin, 2020. "Time-varying income and price elasticities for energy demand: Evidence from a middle-income panel," Energy Economics, Elsevier, vol. 86(C).
    18. Silvapulle, Param & Smyth, Russell & Zhang, Xibin & Fenech, Jean-Pierre, 2017. "Nonparametric panel data model for crude oil and stock market prices in net oil importing countries," Energy Economics, Elsevier, vol. 67(C), pages 255-267.
    19. Gustavo A. Marrero & Francisco J. Ramos-Real, 2013. "Activity Sectors and Energy Intensity: Decomposition Analysis and Policy Implications for European Countries (1991–2005)," Energies, MDPI, vol. 6(5), pages 1-20, May.
    20. Song, Feng & Zheng, Xinye, 2012. "What drives the change in China's energy intensity: Combining decomposition analysis and econometric analysis at the provincial level," Energy Policy, Elsevier, vol. 51(C), pages 445-453.
    21. Gilbert E. Metcalf, 2008. "An Empirical Analysis of Energy Intensity and Its Determinants at the State Level," The Energy Journal, , vol. 29(3), pages 1-26, July.
    22. Gale A. Boyd and Joseph M. Roop, 2004. "A Note on the Fisher Ideal Index Decomposition for Structural Change in Energy Intensity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 87-102.
    23. Parker, Steven & Liddle, Brantley, 2016. "Energy efficiency in the manufacturing sector of the OECD: Analysis of price elasticities," Energy Economics, Elsevier, vol. 58(C), pages 38-45.
    24. Özbuğday, Fatih Cemil & Erbas, Bahar Celikkol, 2015. "How effective are energy efficiency and renewable energy in curbing CO2 emissions in the long run? A heterogeneous panel data analysis," Energy, Elsevier, vol. 82(C), pages 734-745.
    25. Ang, B.W. & Zhang, F.Q., 2000. "A survey of index decomposition analysis in energy and environmental studies," Energy, Elsevier, vol. 25(12), pages 1149-1176.
    26. Ghosh, Sajal, 2009. "Import demand of crude oil and economic growth: Evidence from India," Energy Policy, Elsevier, vol. 37(2), pages 699-702, February.
    27. J. Harold & J. Cullinan & S. Lyons, 2017. "The income elasticity of household energy demand: a quantile regression analysis," Applied Economics, Taylor & Francis Journals, vol. 49(54), pages 5570-5578, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Manisha Jain, 2022. "Energy efficiency targets and tracking savings: Measurement issues in developing economies," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2022-015, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Yu, Chenyang & Tan, Yuanfang & Zhou, Yu & Zang, Chuanxiang & Tu, Chenglin, 2022. "Can functional urban specialization improve industrial energy efficiency? Empirical evidence from China," Energy, Elsevier, vol. 261(PA).
    3. Wang, Lianghu & Shao, Jun, 2024. "The energy saving effects of digital infrastructure construction: Empirical evidence from Chinese industry," Energy, Elsevier, vol. 294(C).
    4. Armenia Androniceanu & Ioana-Catalina Enache & Elena-Narcisa Valter & Florin-Felix Raduica, 2023. "Increasing Energy Efficiency Based on the Kaizen Approach," Energies, MDPI, vol. 16(4), pages 1-24, February.
    5. Jia, Shanghui & Chen, Xinhui & Jin, Jiayu, 2024. "Digital disruption and energy efficiency: The impact of regional digitalization on China's industrial sector," Energy, Elsevier, vol. 300(C).
    6. Lee, Chien-Chiang & Olasehinde-Williams, Godwin & Özkan, Oktay, 2024. "Is geopolitical oil price uncertainty forcing the world to use energy more efficiently? Evidence from advanced statistical methods," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 908-919.
    7. Tsai, I-Chun, 2024. "Fossil energy risk exposure of the UK electricity system: The moderating role of electricity generation mix and energy source," Energy Policy, Elsevier, vol. 188(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mirza, Faisal Mehmood & Sinha, Avik & Khan, Javeria Rehman & Kalugina, Olga A. & Zafar, Muhammad Wasif, 2022. "Impact of Energy Efficiency on CO2 Emissions: Empirical Evidence from Developing Countries," MPRA Paper 111923, University Library of Munich, Germany, revised 2022.
    2. Akbar Ullah & Karim Khan & Munazza Akhtar, 2014. "Energy Intensity: A Decomposition Exercise for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 53(4), pages 531-549.
    3. Mohamad Husam Helmi & Abdurrahman Nazif Çatık & Çağla Bucak & Esra Ballı & Coşkun Akdeniz, 2024. "Time-Varying Income and Price Elasticities of Oil Demand in OECD Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 14(6), pages 303-311, November.
    4. Jin, Taeyoung, 2022. "Impact of heat and electricity consumption on energy intensity: A panel data analysis," Energy, Elsevier, vol. 239(PA).
    5. Zhang, Fan, 2013. "The energy transition of the transition economies: An empirical analysis," Energy Economics, Elsevier, vol. 40(C), pages 679-686.
    6. Ajayi, V. & Reiner, D., 2018. "European Industrial Energy Intensity: The Role of Innovation 1995-2009," Cambridge Working Papers in Economics 1835, Faculty of Economics, University of Cambridge.
    7. Delwar Hossain, 2014. "Differential Impacts of Foreign Capital and Remittance Inflows on Domestic Savings in the Developing Countries: A Dynamic Heterogeneous Panel Analysis," Departmental Working Papers 2014-07, The Australian National University, Arndt-Corden Department of Economics.
    8. Muntasir Murshed & Uzma Khan & Aarif Mohammad Khan & Ilhan Ozturk, 2023. "Can energy productivity gains harness the carbon dioxide‐inhibiting agenda of the Next 11 countries? Implications for achieving sustainable development," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 307-320, February.
    9. Eleyan, Mohammed I.Abu & Çatık, Abdurrahman Nazif & Balcılar, Mehmet & Ballı, Esra, 2021. "Are long-run income and price elasticities of oil demand time-varying? New evidence from BRICS countries," Energy, Elsevier, vol. 229(C).
    10. Azhgaliyeva, Dina & Liu, Yang & Liddle, Brantley, 2020. "An empirical analysis of energy intensity and the role of policy instruments," Energy Policy, Elsevier, vol. 145(C).
    11. Hassan, Taimoor & Song, Huaming & Khan, Yasir & Kirikkaleli, Dervis, 2022. "Energy efficiency a source of low carbon energy sources? Evidence from 16 high-income OECD economies," Energy, Elsevier, vol. 243(C).
    12. Yilmaz BAYAR & Mahmut Unsal SASMAZ, 2019. "Foreign borrowing, foreign direct investment inflows and economic growth in European Union transition economies," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 10, pages 107-125, December.
    13. Adel Ben Youssef & Mounir Dahmani, 2024. "Assessing the Impact of Digitalization, Tax Revenues, and Energy Resource Capacity on Environmental Quality: Fresh Evidence from CS-ARDL in the EKC Framework," Sustainability, MDPI, vol. 16(2), pages 1-23, January.
    14. Luo, Shunjun & Mabrouk, Fatma, 2022. "Nexus between natural resources, globalization and ecological sustainability in resource-rich countries: Dynamic role of green technology and environmental regulation," Resources Policy, Elsevier, vol. 79(C).
    15. Xiuzhi He & Samiha Khan & Ilhan Ozturk & Muntasir Murshed, 2023. "The role of renewable energy investment in tackling climate change concerns: Environmental policies for achieving SDG‐13," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1888-1901, June.
    16. abid, Nabila & Ceci, Federica & Razzaq, Asif, 2023. "Inclusivity of information and communication technology in ecological governance for sustainable resources management in G10 countries," Resources Policy, Elsevier, vol. 81(C).
    17. Li, Qingtao & Sharif, Arshian & Razzaq, Asif & Yu, Yangyu, 2022. "Do climate technology, financialization, and sustainable finance impede environmental challenges? Evidence from G10 economies," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    18. Khan, Zeeshan & Ali, Muhsin & Jinyu, Liu & Shahbaz, Muhammad & Siqun, Yang, 2020. "Consumption-based carbon emissions and trade nexus: Evidence from nine oil exporting countries," Energy Economics, Elsevier, vol. 89(C).
    19. Liton Chandra Voumik & Mohammad Iqbal Hossain & Md. Hasanur Rahman & Raziya Sultana & Rahi Dey & Miguel Angel Esquivias, 2023. "Impact of Renewable and Non-Renewable Energy on EKC in SAARC Countries: Augmented Mean Group Approach," Energies, MDPI, vol. 16(6), pages 1-19, March.
    20. Norazah Mohd Suki & Norbayah Mohd Suki & Arshian Sharif & Sahar Afshan, 2021. "The role of logistics performance for sustainable development in top Asian countries: Evidence from advance panel estimations," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(4), pages 595-606, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:254:y:2022:i:pa:s0360544222011847. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.