How Energy Prices Shape OECD Economic Growth: Panel Evidence from Multiple Decades
Hillard Huntington and
Brantley Liddle ()
MPRA Paper from University Library of Munich, Germany
New fears about escalating fuel prices and accumulating inflation are raising concerns about the possible dimming of near-term prospects for world economic growth. The role of energy prices in shaping economic growth relates not only to geopolitical risks or environmental taxes but also to a range of strategies that place moratoria on primary energy sources like nuclear, coal, petroleum, and natural gas. Applying a new data set for country-level energy prices since 1960, this study evaluates the effects of energy prices on economic growth in 18 OECD countries by controlling for other important macroeconomic conditions that shape economic activity. Mean-group estimates that control for cross-country correlations are used to emphasize average responses across nations. Averaged across all nations, results suggest that a 10 percent increase in energy prices dampened economic growth by about 0.15 percent. Moreover, some evidence exists that this response may be larger for more energy-intensive economies.
Keywords: OECD economic growth; energy prices; cross-country panel analysis (search for similar items in EconPapers)
JEL-codes: C23 O47 Q43 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-gro and nep-mac
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Journal Article: How energy prices shape OECD economic growth: Panel evidence from multiple decades (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:113040
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