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

Abstract

Since 1978, an important literature has been developed on the relationship between gross national product 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-gross domestic product (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.

Heterogeneous effects of urbanization and environment Kuznets curve hypothesis in Africa

“…Magazzino (2017) found that renewable energy consumption increases due to improvements in the GDP level. Magazzino (2016) concluded that a feedback and growth hypothesis exists between CO 2 emissions and GDP in Armenia, Georgia, and Azerbaijan, while a neutrality hypothesis exists in Turkey. While trade openness increases environmental pollution, the EKC hypothesis is invalid.…”

The nexus between eco‐friendly technology and environmental degradation in India: Does the N or inverted N‐shape load capacity curve(LCC) hypothesis hold?

“…Nonetheless, studies associated with pollution control or abatement are also there in the prevailing literature (Magazzino, 2016(Magazzino, , 2017Magazzino et al, 2023). In such a context, this section briefly outlines a few related studies in this area.…”

“…The role of energy consumption on economic growth is well fertile in literature (Magazzino, 2016(Magazzino, , 2017. However, for the last couple of decades, the environment and energy literature debates have revolved around the pollution that emanates from energy use and its abatement mechanism (Ssali et al, 2019).…”

“…The potential factors that are responsible for environmental degradation have been assessed by many scholars. Nonetheless, studies associated with pollution control or abatement are also there in the prevailing literature (Magazzino, 2016, 2017; Magazzino et al, 2023). In such a context, this section briefly outlines a few related studies in this area.…”

“…As far as the environmental quality measurement is concerned, the studies typically focus on the CO 2 emissions amounts to the environment for measuring the level of pollution in the formation of environmental degradation function (Çetin et al, 2021;Ertugrul et al, 2016;Magazzino, 2016Magazzino, , 2017Sümerli Sarıgül & Altay Topcu, 2021;Wangzhou et al, 2022). Although CO 2 emissions are a healthy measure of environmental quality, it is limited to air pollution since environmental pollution comprises different dimensions beyond air pollution, including the pollution of water and soil.…”