A multicomponent DEA approach to measure the economic and energy efficiencies of OECD countries

Abbas Valadkhani, Israfil Roshdi () and Russell Smyth

No 09-15, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: We employ a multicomponent Data Envelopment Analysis (DEA) framework to examine the interplay between economic and energy efficiency for all 29 OECD countries and then classify each country into one of four categories in terms of their relative economic and energy efficiency. In addition to using a broader set of inputs and improved measure of labour compared with prior studies, we make a methodological contribution in that we develop a new complete multi-component DEA measure for examining the efficiency performance of individual countries. Our proposed measure provides an efficiency index, not only at the country level, but also decomposes overall efficiency into economic and energy components. The G7 countries display the worst performance, in terms of CO2 and energy efficiencies. For the sample as a whole, there is a positive and marginally significant relationship between economic efficiency and energy efficiency. This finding suggests that higher economic and energy efficiencies are not necessarily incompatible goals.

Keywords: Energy efficiency; CO2 emissions; Real GDP; Data envelopment analysis (search for similar items in EconPapers)
JEL-codes: C61 O44 Q43 Q51 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2015-01
New Economics Papers: this item is included in nep-eff and nep-ene
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Citations: View citations in EconPapers (1)

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