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Does energy consumption affect growth?

Author

Listed:
  • Saten Kumar

    (Department of Economics, Auckland University of Technology, Auckland, New Zealand.)

  • Don J. Webber

    (Department of Accounting, Economics and Finance, University of the West of England, Bristol, UK)

  • Antonio Paradiso

    (Department of Economics, University of Rome La Sapienza, Rome, Italy)

Abstract

A review of the literature reveals discrepancies between estimates of the impact of energy consumption on output and growth. This paper highlights the importance of underlying theoretical concerns, extends a neoclassical growth model to include energy consumption, applies panel data cointegration methods that deal with cross-sectional dependence and structural breaks to a sample of thirteen high energy consuming countries, and provides empirical estimates of the impact of energy consumption on output and growth. Results suggest that energy consumption has a permanent positive effect on output levels but has no statistically significant effect on growth. We suggest that rebound effects may confound the observable effects of energy on growth and that the effects on the environment of attempts to stimulate economic growth may never be forecast correctly ex ante.

Suggested Citation

  • Saten Kumar & Don J. Webber & Antonio Paradiso, 2012. "Does energy consumption affect growth?," Working Papers 2012-04, Auckland University of Technology, Department of Economics.
    • Handle: RePEc:aut:wpaper:201204
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    References listed on IDEAS

    as
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    2. Joakim Westerlund, 2006. "Testing for Panel Cointegration with Multiple Structural Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(1), pages 101-132, February.
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    More about this item

    Keywords

    Energy consumption per capita; Level effect; Growth effect.;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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