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The Role of Energy in Productivity Growth: A Controversial Issue?

Abstract:
The main objective of this paper is to clarify the controversial role of energy in productivity growth. This is done by reconciling conventional approaches to the measurement of aggregated productivity growth with the microeconomic foundations provided by the energy economics and frontier productivity measurement literature. The use of Malmquist productivity indices allows us to broaden previous research by decomposing productivity growth into technological progress and technical efficiency change as well as analysing the relationship between energy and both sources of productivity change. By doing so, our findings are that energy indeed matters and that the consideration of technical efficiency contributes to a better understanding of both the temporal evolution and cross-country variability of aggregated productivity growth.

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Energy Specializations: Energy Modeling – Energy Data, Modeling, and Policy Analysis; Energy and the Economy – Energy as a Productive Input; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance; Energy and the Economy – Energy Shocks and Business Cycles

JEL Codes:
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
O13 - Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q34 - Natural Resources and Domestic and International Conflicts
F44 - International Business Cycles

Keywords: Energy productivity, Malmquist productivity Indices, total factor productivity growth, OECD

DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No2-4


Published in Volume 26, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.