Abstract
We aim to investigate the effect of gross and fixed form of capital formation on electricity production and energy consumption in Indonesia during the period 1993-2018. Our found results are suggesting that most of the gross/fixed capital formation measures are not affecting either the electricity production or the energy production in Indonesia. However, more specifically key measures of gross/fixed capital formation like Gross fixed capital formation, private sector (% of GDP) and Gross fixed capital formation, private sector (current LCU) are showing their mixed impact on Electricity production from renewable sources, excluding hydroelectric (% of total), and Electricity production from renewable sources, excluding hydroelectric (kWh). On the other hand, Gross fixed capital formation (annual % growth) has its Fossil fuel energy consumption (% of total), and Renewable energy consumption (% of total final energy consumption). The stated findings have some limited implications for the financial analysts and policy makers dealing with the electricity production and overall consumption of fossil fuel and renewable energy sources. Yet, this research is confined to Indonesian economy; however, adding the other regional economies in future studies may provide some different results.Keywords: cross/fixed capital formation, energy consumption, electricity productionJEL Classifications: K32, H54, D24DOI: https://doi.org/10.32479/ijeep.10940
Highlights
In different field of studies, the idea of capital formation (CF) is principally used, while exploring its conceptual relationship with set of indicators
Capital formation in the country of Indonesia is examined with some diversified patterns over the last few decades
Energy consumption is reflected with Fossil fuel energy consumption (% of total) and Renewable energy consumption (% of total final energy consumption)
Summary
In different field of studies, the idea of capital formation (CF) is principally used, while exploring its conceptual relationship with set of indicators. The concept “capital formation” has been used to discuss for setting up an organization, with some fiscal measures, saving’s drivers, public borrowing, growth of capital markets as well as secondary markets and privatization of financial institutions. For investments objectives, it mentions any process for control of capital amount, or raising the amount of capital retained, or any scheme in developing the capital resources (Welch, 2016; Hernández, 2020; Hernández and Prieto, 2020; King and Samaniego, 2020)
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