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Understanding the energy-GDP elasticity: A sectoral approach

Paul Burke () and Zsuzsanna Csereklyei

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: This paper uses per capita data for 132 countries over 1960–2010 to estimate elasticities of sectoral energy use with respect to national gross domestic product (GDP). We estimate models in both levels and growth rates and use our estimates to sectorally decompose the aggregate energy-GDP elasticity. Our estimates show that residential energy use is very inelastic to GDP if primary solid biofuels are counted in energy use tallies, especially at low income levels. Residential use of electricity is more tightly linked to GDP, as is energy use by the transportation, industrial, and services sectors. Agriculture typically accounts for a small share of energy use and has a modest energy-GDP elasticity. The aggregate energy-GDP elasticity tends to be higher for countries at higher income levels, in large part because traditional use of primary solid biofuels is less important. Gasoline prices, winter temperature, population, and land area are among other factors influencing sectoral energy use.

Keywords: elasticity; sectoral; energy use; economic development; economic growth; decomposition (search for similar items in EconPapers)
JEL-codes: O13 Q43 O11 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2016-07
New Economics Papers: this item is included in nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2016-45

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