On the Relationship between Gross Domestic Product and Energy: A Critical Comment

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Abstract

GNP and energy. The obvious interest in this relationship is a result of the global interest in reducing the use of energy without impairment of economic growth. Most studies do not have an economic model underlying the statistical models. In the absence of an economic model supporting the estimable equations, the statistical results can be interpreted arbitrarily or they may not have an interpretation that can be theoretically supported. In this paper we attempt to do four things. First, we briefly present the four hypotheses that have been formulated to express the energy-GDP relationship. Second, we argue that the relationship between GDP and energy, as is formulated in two of the hypotheses (the growth hypothesis and the feedback hypothesis), and as is examined in part of this literature, suffers from misspecification, because a decisive factor for the energy market is missing. Third, we use basic economic theory to show how GDP and energy are related on the basis of production theory and derived demand for factors of production, and, fourth, we conclude by suggesting which of the four hypotheses can serve as a meaningful approximation of the relationship.Keywords: GDP-energy nexus, Conservation hypothesis, Growth hypothesis, Feedback hypothesis, Neutrality hypothesisJEL Classifications: Q41, Q43DOI: https://doi.org/10.32479/ijeep.8418

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Author Biographies

Theodore P. Lianos, Department of Economics, Athens University of Economics and Business

Professor (since 1977, now retired & Emeritus)Department of Economics, Athens University of Economics and Business

Anastasia Pseiridis, Panteion University, Department of Economics & Regional Development

Assistant Professor of Economics (tenured),Department of Economics and Regional Development,Panteion University

Nicholas Tsounis, Department of Economic Sciences, University of Western Macedonia

Professor,Department of Economic Sciences, University of Western Macedonia

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Published

2020-01-21

How to Cite

Lianos, T. P., Pseiridis, A., & Tsounis, N. (2020). On the Relationship between Gross Domestic Product and Energy: A Critical Comment. International Journal of Energy Economics and Policy, 10(2), 458–463. Retrieved from https://mail.econjournals.com/index.php/ijeep/article/view/8418

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