Energy and Economic Growth: The Stylized Facts

Zsuzsanna Csereklyei,David I Stern,M D Mar Rubio-Varas

doi:10.5547/01956574.37.2.zcse

Zsuzsanna Csereklyei, David I Stern + Show 1 more

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https://doi.org/10.5547/01956574.37.2.zcse

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Abstract

We summarize what we know about energy and economic growth in a set of stylized facts. We combine analysis of a panel data set of 99 countries from 1971 to 2010 with analysis of some longer run historical data. Our key result is that over the last 40 years there has been a stable cross-sectional relationship between per capita energy use and income per capita with an elasticity of energy use with respect to income of less than unity. This implies that energy intensity has tended to decrease in countries that have become richer but not in others. We also find that over the last two centuries there has been convergence in energy intensity towards the current distribution, per capita energy use has tended to rise and energy quality to increase, and, though evidence is limited, the cost share of energy has declined.

Highlights

Kaldor (1957, 1961) highlighted six “stylized’’ facts that summarized the patterns that economists had discovered in national income accounts with a view to shaping the growth models being developed to explain them
For our 1971–2010 panel data set, we examine the relationship between energy and economic growth by systematically examining both the cross sectional relationships between energy use per capita (E/P), energy intensity (E/Y), and the energy/capital ratio (E/K) and income per capita (Y/P), as well as the time evolution of these three variables
The stylized facts laid out in the previous section will need to be taken into account in future studies of the relationship between energy use and economic development

Summary

Introduction

Kaldor (1957, 1961) highlighted six “stylized’’ facts that summarized the patterns that economists had discovered in national income accounts with a view to shaping the growth models being developed to explain them. We attempt to summarize what we know about energy and economic growth in a similar set of stylized facts with the intention of informing the development of models of energy and economic growth. We carry out a systematic analysis of a global dataset covering the 1971–2010 period and look at the longer run historical data that are available. This reveals a new set of stylized facts that is sometimes at odds with the received wisdom

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