Abstract
GNP and energy. The obvious interest in this relationship is a result of the global interest in reducing the use of energy without impairment of economic growth. Most studies do not have an economic model underlying the statistical models. In the absence of an economic model supporting the estimable equations, the statistical results can be interpreted arbitrarily or they may not have an interpretation that can be theoretically supported. In this paper we attempt to do four things. First, we briefly present the four hypotheses that have been formulated to express the energy-GDP relationship. Second, we argue that the relationship between GDP and energy, as is formulated in two of the hypotheses (the growth hypothesis and the feedback hypothesis), and as is examined in part of this literature, suffers from misspecification, because a decisive factor for the energy market is missing. Third, we use basic economic theory to show how GDP and energy are related on the basis of production theory and derived demand for factors of production, and, fourth, we conclude by suggesting which of the four hypotheses can serve as a meaningful approximation of the relationship. Keywords : GDP-energy nexus, Conservation hypothesis, Growth hypothesis, Feedback hypothesis, Neutrality hypothesis JEL Classifications: Q41, Q43 DOI: https://doi.org/10.32479/ijeep.8418
Highlights
Since 1978, when Kraft and Kraft (1978) published their seminal three-page paper on the relationship between gross national product and energy, an important literature has been developed on this issue
The obvious interest of researchers in this relationship is a result of the global interest in reducing the use of energy so that economic growth will not be impaired
We argue that the relationship between gross domestic product (GDP) and energy as is formulated in two of the hypotheses, the growth hypothesis and the feedback hypothesis, and as is examined in part of this literature suffers from misspecification, in the sense that a decisive factor for the energy market is missing
Summary
Since 1978, when Kraft and Kraft (1978) published their seminal three-page paper on the relationship between gross national product and energy, an important literature has been developed on this issue. In the words of Kalimeris et al (2014), their attempt “to examine the concreteness and consistency of the debate’s result by means of meta-analysis failed to define a robust macro causality direction and, failed to identify general factors and causal relationships determining the directionality” (p9). This failure is attributed to the fact that the examined studies differ in the time period covered, in the characteristics of the economies, in the different climatic conditions, in the sources of data, and in the econometric methods used. The papers we have already cited are sufficient for our purposes
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