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How Dependent is Growth from Primary Energy? The Dependency ratio of Energy in 33 Countries (1970-2011)

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Abstract
Except for specialized resource economics models, economics pays little attention to the role of energy in growth. This paper highlights basic difficulties behind the mainstream analytical arguments for this neglect, and provides an empirical reassessment of this role. We use an error correction model in order to estimate the long-run dependency ratio of output with respect to primary energy use in 33 countries between 1970 and 2011. Our findings suggest that this dependency is much larger than the usual calibration of output elasticity with respect to energy. This strong dependency is robust to the choice of various samples of countries and subperiods of time. In addition, we show that energy and growth are cointegrated and that primary energy consumption univocally Granger causes GDP growth. The latter confirms and extends the results on cointegration and causality between energy consumption and growth already obtained in Stern (2010)

Suggested Citation

  • Gaël Giraud & Zeynep Kahraman, 2014. "How Dependent is Growth from Primary Energy? The Dependency ratio of Energy in 33 Countries (1970-2011)," Documents de travail du Centre d'Economie de la Sorbonne 14097, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:14097
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    File URL: ftp://mse.univ-paris1.fr/pub/mse/CES2014/14097.pdf
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    Cited by:

    1. Santos, João & Domingos, Tiago & Sousa, Tânia & St. Aubyn, Miguel, 2016. "Does a small cost share reflect a negligible role for energy in economic production? Testing for aggregate production functions including capital, labor, and useful exergy through a cointegration-base," MPRA Paper 70850, University Library of Munich, Germany.
    2. Arnold McIntyre & Ahmed El-Ashram & Mr. Márcio Valério Ronci & Julien Reynaud & Ms. Natasha X Che & Ke Wang & Mr. Sebastian Acevedo Mejia & Mr. Mark Scott Lutz, 2016. "Caribbean Energy: Macro-Related Challenges," IMF Working Papers 2016/053, International Monetary Fund.
    3. Acurio Vásconez, Verónica & Giraud, Gaël & Mc Isaac, Florent & Pham, Ngoc-Sang, 2015. "The effects of oil price shocks in a new-Keynesian framework with capital accumulation," Energy Policy, Elsevier, vol. 86(C), pages 844-854.
    4. Gaël Giraud, 2014. "What understanding of capital for tomorrow?," Documents de travail du Centre d'Economie de la Sorbonne 14096, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. Graham Palmer, 2018. "A Biophysical Perspective of IPCC Integrated Energy Modelling," Energies, MDPI, vol. 11(4), pages 1-17, April.
    6. Carey W. King, 2021. "Interdependence of Growth, Structure, Size and Resource Consumption During an Economic Growth Cycle," Papers 2106.02512, arXiv.org.
    7. Maxime MENUET & Alexandru MINEA & Patrick VILLIEU & Anastasios XEPAPADEAS, 2021. "Growth, Endogenous Environmental Cycles, and Indeterminacy," LEO Working Papers / DR LEO 2889, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    8. Maxime Menuet & Alexandru Minea & Patrick Villieu & Anastasios Xepapadeas, 2020. "Economic Growth and the Environment: A Theoretical Reappraisal," DEOS Working Papers 2031, Athens University of Economics and Business.
    9. Carey W. King, 2022. "Interdependence of Growth, Structure, Size and Resource Consumption During an Economic Growth Cycle," Biophysical Economics and Resource Quality, Springer, vol. 7(1), pages 1-30, March.
    10. Magalhães, Nelo & Fressoz, Jean-Baptiste & Jarrige, François & Le Roux, Thomas & Levillain, Gaëtan & Lyautey, Margot & Noblet, Guillaume & Bonneuil, Christophe, 2019. "The Physical Economy of France (1830–2015). The History of a Parasite?," Ecological Economics, Elsevier, vol. 157(C), pages 291-300.
    11. Susana Silva & Isabel Soares & Carlos Pinho, 2018. "Renewable energy subsidies versus carbon capture and sequestration support," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(3), pages 1213-1227, June.
    12. Bercegol, Hervé & Benisty, Henri, 2022. "An energy-based macroeconomic model validated by global historical series since 1820," Ecological Economics, Elsevier, vol. 192(C).

    More about this item

    Keywords

    Dependency ratio; output elasticity; energy; energy efficiency; error correction model;
    All these keywords.

    JEL classification:

    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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