Abstract
The main objective of this research is to investigate the dynamic effects of energy consumption on economic growth in the Indonesian context. Based on the annual data of 1990-2017, the empirical ARDL model presents significant effects of energy use, electric power and renewable energy consumption on economic growth. The analysis using error correction model presents the long-run effect of energy use on economic growth. In the short-run, the electric power consumption and labor participation rate have a positive effect on economic growth. The variable of energy use has symmetric effects both in long and short-term periods. The electric power and renewable energy consumption have asymmetric effects in the long-and short-run models. This paper highlights that energy consumption and labor force are the main sources of economic growth in this country. It implies that the research findings are in line with the neoclassical theory.
Highlights
The issue of energy consumption has become the main topic of discussion in Indonesia for a long time
The objective of this research is to investigate the dynamic effects of capital, labor force, energy consumption, and government policies on economic growth in the Indonesian context
Based on the time series data of 1971-2017, this study concludes that the main factors of economic growth are energy use, electric power consumption, and labor participation rate
Summary
The issue of energy consumption has become the main topic of discussion in Indonesia for a long time. It relates to its impact on the economic development process in all sectors such as household activities, industry development, transportation, services, and other sectors. Some previous studies provide the analysis results of the relationship between energy consumption and economic growth in various countries (Dahmardeh et al, 2012; Kao and Wan, 2017; Karhan, 2019; Zeshan and Ahmed, 2014). Most of these papers confirm the positive impacts of energy consumption on economic growth
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