Revisiting and revising the energy-growth nexus: A non-linear modeling analysis

Abstract

The third millennium was characterized by the generalized conscience about the role of energy in boosting the wealth. Indeed, the aim of this survey is to estimate the threshold level of demand for energy above which energy consumption exerts negative impact on income level for 90 economies which are subdivided into three sub-panel (low-, middle-, and –high-income) during a time span 1990–2015. The resulting insights of the survey revealed that the nexus among the income factor and the energy use is nonlinear. For the high-income economies, the estimation results indicate that this threshold between the two regimes takes the value of 8.961 (=7793.9260). Furthermore, in the middle-income economies, the estimation results indicate that this threshold between the two regimes takes the value of 7.4875 (=1785.5825). However, in the low-income economies, the estimation results indicate that this threshold between the two regimes takes the value of 6.1967 (= 491.1256). These countries are invited to initiate stricter environmental policies, leading to a higher cost of producing pollution-intensive products for firms.