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Energy consumption, output and trade in South America

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  • Sadorsky, Perry

Abstract

This study uses panel cointegration regression techniques to examine the relationship between energy consumption, output and trade in a sample of 7 South American countries covering the period 1980 to 2007. Panel cointegration tests show a long-run relationship between 1) output, capital, labor, energy, and exports and 2) output, capital, labor, energy, and imports. Short-run dynamics show a bi-directional feedback relationship between energy consumption and exports, output and exports and output and imports. There is evidence of a one way short-run relationship from energy consumption to imports. In the long-run there is evidence of a causal relationship between trade (exports or imports) and energy consumption. These results have implications for energy policy and environmental policy. One important implication of these results is that environmental policies designed to reduce energy use will reduce trade. This puts environmental policy aimed at reducing energy consumption at odds with trade policy.

Suggested Citation

  • Sadorsky, Perry, 2012. "Energy consumption, output and trade in South America," Energy Economics, Elsevier, vol. 34(2), pages 476-488.
  • Handle: RePEc:eee:eneeco:v:34:y:2012:i:2:p:476-488
    DOI: 10.1016/j.eneco.2011.12.008
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    More about this item

    Keywords

    Energy consumption; South America; Panel cointegration; Export led growth;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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