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The Energy, Economic Growth, Urbanization Nexus Across Development: Evidence from Heterogeneous Panel Estimates Robust to Cross-Sectional Dependence

Brantley Liddle

Year: 2013
Volume: Volume 34
Number: Number 2
DOI: 10.5547/01956574.34.2.8
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Abstract:
This paper combines two aggregate production function models--one with urbanization as a shift factor and one that includes energy/electricity consumption and physical capital--to estimate the macro-level relationship among urbanization, energy/electricity consumption, and economic growth using a panel method that is robust to both cointegration and cross-sectional dependence. For four panels (comprising in turn high, upper middle, lower middle, and low income countries) GDP per capita, total final energy and electricity consumption per capita, gross fixed capital formation per capita, and urbanization were found to be I(1), cross-sectionally dependent, and cointegrated. The long-run elasticity estimates suggest (i) that urbanization is important to and associated with economic growth, (ii) that urbanization's impact on economic growth ranges from substantially negative to nearly neutral to positive as countries develop--an "urbanization ladder" effect, and (iii) that less developed countries are over-urbanized (their elasticities being negative).



Revisiting the Income Elasticity of Energy Consumption: A Heterogeneous, Common Factor, Dynamic OECD & non-OECD Country Panel Analysis

Brantley Liddle and Hillard Huntington

Year: 2020
Volume: Volume 41
Number: Number 3
DOI: 10.5547/01956574.41.3.blid
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Abstract:
The current paper contributes to the literature on the relationship between economic development and energy demand by assembling a wide panel dataset of energy consumption and prices for 37 OECD and 41 non-OECD countries. The unbalanced data spans 1960-2016, with the full 56 years of data for 17 countries and all countries having at least 18 years. In addition, our dynamic panel estimates address nonstationarity, heterogeneity, and cross-sectional dependence. Most results suggest that the GDP elasticity is less than unity (e.g., 0.7) - i.e., energy intensity will fall with economic growth. Most evidence suggests that the GDP elasticity is similar for OECD and non-OECD countries, and for non-OECD countries, similar across income-bands. Also, there is no evidence that individual country elasticity estimates (for GDP or prices) vary systematically according to income. The price elasticity is larger (in absolute terms) for OECD than for non-OECD countries - indeed, it is typically insignificant for non-OECD countries.





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