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

Muhammad Shahbaz, Giray Gözgör and Shawkat Hammoudeh

Energy Economics, 2019, vol. 78, issue C, 335-349

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.

Keywords: Energy demand; Education; Export diversification; Oil prices; Natural resources (search for similar items in EconPapers)
JEL-codes: I25 L25 O13 Q41 Q43 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (76)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:78:y:2019:i:c:p:335-349

DOI: 10.1016/j.eneco.2018.11.016

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