The Energy Consumption-Real GDP Nexus Revisited: Empirical Evidence from 93 Countries

Abstract

In this paper, we analyze the long-run relationship between energy consumption and real GDP for 93 countries. We find mixed results on the impact of energy consumption on real GDP, with greater evidence at the country level supporting energy consumption having a negative causal effect on real GDP. For the G6 panel of countries, we find significant evidence that energy consumption negatively Granger causes real GDP. This means that for countries where energy consumption has a negative long-run causal effect on real GDP, energy conversation policies should not retard economic growth. We identify these countries and regional panels. We argue that these countries/regions should play a greater role in reducing carbon dioxide emissions.