The growth rebound effect: A theoretical–empirical investigation into the relation between rebound effects and economic growth

Abstract

Rebound effects may challenge the concept that green growth can reconcile economic growth and reductions in energy consumption. This article investigates the interdependence between the rebound phenomenon and growth and introduces the ‘growth rebound effect’ (GRE) following a three-track strategy. First, we assess whether individual rebound mechanisms are associated with economic growth. Rebound mechanisms at all economic levels (micro, meso and macro) contribute to economic growth. 14 out of 22 rebound mechanisms lead to economic growth. Second, we analyse the perspective of macroeconomic approaches. While all approaches argue for the existence of a GRE, its size differs. The historical approach and the exergy approach predict a large GRE while the cost-share theorem approach predicts a small GRE. The difference lies in the former two arguing for energy efficiency impacting economic growth via a third variable. Third, we conduct an econometric estimation of the GRE using a unique bottom-up index of energy efficiency and a dynamic panel data model. Our estimation of a GRE between 20% and 47% depicts a lower bound estimate — the true GRE is probably larger. Considerably reducing energy consumption may require policies beyond green growth.