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Economic Development and the Structure of the Demand for Commercial Energy

Abstract:
To deepen understanding of the relation between economic development and energy demand, this study estimates the relations between per-capita GDP5 and per-capita energy consumption in major economic sectors. Panel data covering up to 123 nations are employed, and measurement problems are treated both in dataset construction and in estimation. Time and country fixed effects are assumed, and flexible forms for income effects are employed. There are substantial differences among sectors in the structure of country, time, and income effects. In particular, the household sector's share of aggregate energy consumption tends to fall with income, the share of transportation tends to rise, and the share of industry follows an inverse-U pattern.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Natural Gas – Markets and Prices; Coal – Markets and Prices; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q40: Energy: General

Keywords: economic development, GDP, carbon dioxide emissions, Engle curves, commercial energy use, forecasting

DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No2-2

Published in Volume20, Number 2 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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