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Reactions of energy intensity, energy efficiency, and activity indexes to income and energy price changes: The panel data evidence from OECD countries

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  • Gorus, Muhammed Sehid
  • Karagol, Erdal Tanas

Abstract

Energy has had an important effect on the economic growth process of the countries for decades. Therefore, it has received attention from practitioners in the empirical literature of energy economics. This study aims to explore the factors affecting energy intensity, energy efficiency, and activity indexes for 27 OECD countries during the period 1980–2018. For this purpose, the study constructs the energy indexes through the decomposition analysis based on the Fisher ideal index. Then, per capita gross domestic product and energy prices index are used as a proxy for income and energy prices. In this study, the authors conduct recent panel data techniques that take into consideration the cross-sectional dependence. The empirical results of this paper exhibit that income affects both the energy intensity index and the energy efficiency index negatively for most countries. In contrast, its effect on the activity index varies across countries. Besides, it is found that energy prices’ impact on these three indexes is mixed; economies reacted to the change in prices differently due to their country-specific characteristics. These empirical findings suggest several courses of action for policymakers.

Suggested Citation

  • Gorus, Muhammed Sehid & Karagol, Erdal Tanas, 2022. "Reactions of energy intensity, energy efficiency, and activity indexes to income and energy price changes: The panel data evidence from OECD countries," Energy, Elsevier, vol. 254(PA).
  • Handle: RePEc:eee:energy:v:254:y:2022:i:pa:s0360544222011847
    DOI: 10.1016/j.energy.2022.124281
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