Energy prices, growth, and the channels in between: Theory and evidence

Lucas Bretschger

Resource and Energy Economics, 2015, vol. 39, issue C, 29-52

Abstract: The paper presents stylized cross-country evidence for a negative relationship between energy use and economic growth. Based on this motivation it develops a multisector framework to derive the growth impact of energy from first principles. The structural model is empirically estimated for a sample of 37 developed countries with five-year average data over the period 1975–2009. Estimations of both separate equations and simultaneous systems of equations are performed. The empirical results show a negative impact of energy use on investments in physical capital and knowledge formation. The estimations of simultaneous equations exhibit a dynamic effect of energy use: decreasing energy input and increasing energy prices induce additional investments fostering long-run growth. The growth effect counteracts the negative static effects of lower energy use.

Keywords: Energy; Development; Capital accumulation; Panel data (search for similar items in EconPapers)
JEL-codes: O41 O47 Q43 Q56 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Related works:
Working Paper: Energy Prices, Growth, and the Channels in Between: Theory and Evidence (2010)
Working Paper: Energy Prices, Growth,and the Channels in Between: Theory and Evidence (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:39:y:2015:i:c:p:29-52

DOI: 10.1016/j.reseneeco.2014.11.002

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