Evidence of causality between the quantity and quality of energy consumption and economic growth

Warr BS & Ayres RU (2010). Evidence of causality between the quantity and quality of energy consumption and economic growth. Energy 35 (4): 1688-1693. DOI:10.1016/j.energy.2009.12.017.

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Abstract

The aim of this paper is to re-examine the energy-GDP relationship for the US for the period 1946-2000 by redefining energy in terms of exergy (the amount of energy available for useful work) and the amount of useful work provided for energy inputs. This enables us to examine whether output growth depends on either the quantity of energy supplied and /or the efficiency of energy use. Two multivariate models were estimated involving GDP, capital, labour and the two measures of energy. We find that unidirectional causality runs from either energy measure to GDP. We attribute the causation to both short- and long-run effects in the case of exergy, but only long-run effects in the case of useful work. We find no evidence of causality running from GDP to either energy measure. We infer that output growth does not drive increased energy consumption and to sustain long-term growth it is necessary to either increase energy supplies or increase the efficiency of energy usage. Faced with energy security concerns and the negative externalities of fossil fuel use the latter option is preferred.

Item Type: Article
Uncontrolled Keywords: Energy; Exergy; Energy efficiency; Economic growth; Causality; Cointegration
Research Programs: Institute Scholars (INS)
Bibliographic Reference: Energy; 35(4):1688-1693 (April 2010) (Published online 02 February 2010)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:44
Last Modified: 22 Feb 2016 14:52
URI: http://pure.iiasa.ac.at/9293

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