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Energy consumption, output and trade in South America

Perry Sadorsky

Energy Economics, 2012, vol. 34, issue 2, 476-488

Abstract: This study uses panel cointegration regression techniques to examine the relationship between energy consumption, output and trade in a sample of 7 South American countries covering the period 1980 to 2007. Panel cointegration tests show a long-run relationship between 1) output, capital, labor, energy, and exports and 2) output, capital, labor, energy, and imports. Short-run dynamics show a bi-directional feedback relationship between energy consumption and exports, output and exports and output and imports. There is evidence of a one way short-run relationship from energy consumption to imports. In the long-run there is evidence of a causal relationship between trade (exports or imports) and energy consumption. These results have implications for energy policy and environmental policy. One important implication of these results is that environmental policies designed to reduce energy use will reduce trade. This puts environmental policy aimed at reducing energy consumption at odds with trade policy.

Keywords: Energy consumption; South America; Panel cointegration; Export led growth (search for similar items in EconPapers)
JEL-codes: Q43 F14 O54 (search for similar items in EconPapers)
Date: 2012
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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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