On the Non-Convergence of Energy Intensities: Evidence from a Pair-Wise Econometric Approach
26 Pages Posted: 25 Jan 2009 Last revised: 18 Jan 2017
Date Written: January 22, 2009
This paper evaluates convergence of energy intensities for a group of 97 countries in the period 1971-2003. Convergence is tested using a recent method proposed by Pesaran (2007) [M.H. Pesaran. A pair-wise approach to testing for output and growth convergence. Journal of Econometrics 138, 312-355.] based on the stochastic convergence criterion. Main advantages of this method are that results do not depend on a benchmark against which convergence is assessed, and that it is more robust. Applications of several unit-root tests as well as a stationarity test uniformly reject the global convergence hypothesis. Locally, for Middle-East, OECD and Europe sub-groups, non-convergence is less strongly rejected. The introduction of possible structural breaks in the analysis only marginally provides more support to the convergence hypothesis.
Keywords: Energy intensity, pair-wise test, unit-root test, stationarity test, structural break, convergence
JEL Classification: C32, O40, Q43, Q50
Suggested Citation: Suggested Citation