Exploring non-linear causal nexus between economic growth and energy consumption across various R&D regimes: cross-country evidence from a PSTR model

Khezri, Mohsen, Mamkhezri, Jamal and Heshmati, Almas (2024) Exploring non-linear causal nexus between economic growth and energy consumption across various R&D regimes: cross-country evidence from a PSTR model. Energy Economics, 133. ISSN 0140-9883

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Abstract

Purpose: This study endeavors to elucidate the divergent conclusions encountered in empirical research regarding the interplay of Economic Growth (EG) and Energy Consumption (EC). Design/methodology/approach: For this purpose, we employ the Panel Smooth Threshold Regression (PSTR) model to intricately examine the non-linear impacts of independent variables on EC and EG within a dataset encompassing 46 countries over the period from 1996 to 2021. Findings: The outcomes of our investigation can be summarized as follows: First, the findings underscore the positive impact of the logarithm of net capital formation on EG. This impact is particularly pronounced at low levels of Research and Development (R&D), gradually waning beyond a certain threshold. Second, the ratio of capital to labor exhibits a negative influence on EC at lower R&D levels. Notably, these detrimental impacts become more pronounced as R&D levels increase. Third, trade openness contributes positively to EG, particularly evident at low R&D levels. However, with increasing R&D levels, the incremental benefits from trade diminish. Finally, our findings lend support to the feedback hypothesis. Nevertheless, the impact of R&D expenditures in countries moderates these positive effects. Practical implications: Policymakers should strategically balance resource allocation between capital formation and research endeavors, considering diminishing returns at elevated levels of R&D spending, to ensure sustained EG.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/energy-econo...
Additional Information:	© 2024 The Authors
Divisions:	LSE
Subjects:	H Social Sciences > HB Economic Theory
JEL classification:	F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O32 - Management of Technological Innovation and R&D O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output (Income) Convergence Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q4 - Energy > Q41 - Demand and Supply
Date Deposited:	22 Apr 2024 08:21
Last Modified:	01 May 2024 00:00
URI:	http://eprints.lse.ac.uk/id/eprint/122698

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