The impact of information communication technology on energy demand: Some international evidence

Abstract

This research considers an extended energy demand model with a finite mixture model that is incorporated to account for the heterogeneous nexus between information communication technology (ICT) and energy demand. We estimate this model by employing panel data for 34 OECD and 39 non-OECD countries covering the period from 2007 to 2017. The estimated results denote that a heterogeneous nexus exists between ICT and energy demand. Specifically speaking, ICT can not only exert a positive effect on energy demand, but also a negative impact on energy demand. Furthermore, financial development, government expenditure, and human capital can help ICT reduce energy demand, while foreign direct investment has the opposite effect. Nearly 14% of our sample countries experience switching between groups, whereas the large majority preserve the same group. Finally, compared to the extended energy demand model, the traditional energy demand model that ignores group heterogeneity cannot accurately estimate the price and income elasticities of energy demand.