Relationship between Energy Consumption and Economic Growth in European Countries: Evidence from Dynamic Panel Data Analysis

The aim of the article is to empirically verify the relationship between energy consumption and economic growth. The time scope of this study covers the period of 2008–2019. The scope of analyzed subjects covers 34 European countries, 27 of which are currently members of the European Union. European...

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Published inEnergies (Basel) Vol. 14; no. 12; p. 3565
Main Author Topolewski, Łukasz
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 01.06.2021
Subjects
Alternative energy sources
Causality
Climate change
dynamic panel model
Economic growth
Emerging markets
Emissions
Energy consumption
Environmental policy
European countries
Fossil fuels
Greenhouse gases
Hypotheses
Longitudinal studies
Renewable resources
Research methodology
Colombia
Malaysia
Thailand
Peru
Philippines
Indonesia
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ISSN1996-1073
1996-1073
DOI10.3390/en14123565

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Summary:The aim of the article is to empirically verify the relationship between energy consumption and economic growth. The time scope of this study covers the period of 2008–2019. The scope of analyzed subjects covers 34 European countries, 27 of which are currently members of the European Union. European countries consume large amounts of energy, so it is worth investigating the effect of reducing energy consumption on the process of economic growth. For this purpose, dynamic panel models were used. The research methods included the use of dynamic panel models, taking into account the Arellano and Bond and Blundell and Bond estimators. The results made it possible to identify the relationship between energy consumption and economic growth. It was found that, in the short term, increases in production will result in a statistically significant increase in energy consumption. Importantly, in the long term, this impact is also statistically significant and positive. On the other hand, taking into account the second of the estimated models, it can be concluded that, in the short term, increases in energy consumption do not cause changes in the rate of economic growth. The verification of this relationship in the long term also does not confirm it. In summary, it can be stated that a one-way relationship (in the short and in the long term), directed from economic growth towards energy consumption, was identified.
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ISSN:1996-1073
1996-1073
DOI:10.3390/en14123565