The Economics and Econometrics of the Energy-Growth Nexus

Description

The Economics and Econometrics of the Energy-Growth Nexus recognizes that research in the energy-growth nexus field is heterogeneous and controversial. To make studies in the field as comparable as possible, chapters cover aggregate energy and disaggregate energy consumption and single country and multiple country analysis. As a foundational resource that helps researchers answer fundamental questions about their energy-growth projects, it combines theory and practice to classify and summarize the literature and explain the econometrics of the energy-growth nexus. The book provides order and guidance, enabling researchers to feel confident that they are adhering to widely accepted assumptions and procedures. Cover Title Page Copyright Page Content List of Contributors Foreword References Introduction The Evolution of the Consumption of Different Energy Sources Energy Consumption and Economic Growth The Energy-Economic Growth Nexus Part 1: The Economics of the Energy-Growth Nexus Chapter 1—The Energy-Growth Nexus: History, Development, and New Challenges Chapter 2—Disaggregation in the Energy-Growth Nexus: An Indicative Literature Review Chapter 3—On the Dynamics of Renewable Energy Consumption (Aggregated and Disaggregated) and Economic Growth: An Approach b... Chapter 4—The Role of Potential Factors/Actors and Regime Switching Modeling Chapter 5—Critical Issues to be Answered in the Energy-Growth Nexus Research Field Part 2: The Econometrics of the Energy-Growth Nexus Chapter 6—Practical Issues on Energy-Growth Nexus Data and Variable Selection With Bayesian Analysis Chapter 7—Current Issues in Time-Series Analysis for the Energy-Growth Nexus; Asymmetries and Nonlinearities Case Study: Pa... Chapter 8—Panel Data Analysis in the Energy-Growth Nexus Chapter 9—Testing for Causality: A Survey of the Current Literature Chapter 10—Simultaneous Equations Modeling in the Energy-Growth Nexus Chapter 11—The Energy-Growth Nexus Checklist for Authors References Part 1 - The Economics of the Energy-Growth Nexus Chapter 1 - The Energy-Growth Nexus: History, Development, and New Challenges 1 - Introduction: What is the Energy-Growth Nexus? 1.1 - The Basic Causal Relationships 1.2 - Why did the EGN Emerge? 1.3 - The Global Warming Link 1.4 - The Environmental Kuznets Curve (EKC): The Not-So-Distant Cousin of the EGN A brief literature review of the EKC 2 - The Methodological Development of the EGN 2.1 - Literature Surveys Regarding the EGN 2.1.1 - Meta-analysis 2.2 - An Insufficient Theoretical Basis 2.3 - Methods 2.3.1 - Major approaches 2.4 - Problems in the EGN research 2.4.1 - Limited data availability 2.4.2 - Bivariate versus multivariate studies and omitted variable bias 2.4.3 - Control for prices 2.4.4 - Disaggregation by energy types 2.4.5 - Electricity-growth nexus, renewables, nuclear heat, and other specialized branches 2.4.6 - Sectoral analysis 3 - New Challenges: The Water-Energy-Food (WEF) Nexus 3.1 - Nexus Integration and Assessment 4 - The Hajko Critique 5 - Conclusions References Further Readings Chapter 2 - Disaggregation in the Energy-Growth Nexus: An Indicative Literature Review 1 - Introduction: The Need for Disaggregation in the Energy-Growth Nexus (EGN) 2 - Disagreggation Based on Energy Types and Fuel Types: A Literature Map 2.1 - Nuclear Energy 2.2 - Natural Gas 2.3 - Various Types of Fossil Energy (Oil and Derivatives, Coal, Etc.) 2.4 - The Importance of Renewables 2.5 - The Flourishing Interest in Electricity 3 - Disagreggation Based on Economic Sectors: A Literature Map 3.1 - The Transportation Sector 3.2 - The Commercial Sector 3.3 - The Industry Sector 3.4 - The Residential Sector 4 - Case Study for the United States 4.1 - Data, Methodology, and Results 5 - Conclusions References Further Readings Chapter 3 - On the Dynamics of Renewable Energy Consumption (Aggregated and Disaggregated) and Economic Growth: An Approach... 1 - Introduction 2 - Energy Versus Electricity From Renewables and the Economic Growth Nexus 3 - Disaggregating the EGN 3.1 - Renewables Versus Nonrenewables 3.2 - The Characteristics and the Role Played by Each Electricity Source 3.3 - The Management of the Electricity System: The Challenges of Supporting Renewables’ Intermittency 4 - Disaggregating the EGN in Germany; Replacing Nuclear Power 4.1 - The Monthly Data Framework 4.2 - The Method in the Monthly Data Framework 4.3 - Results From the Monthly Data Framework 4.4 - Robustness Check: Daily Data Framework 4.4.1 - Methods in the daily data framework 4.4.2 - Results from daily data 5 - The Pertinence of Studying Energy Consumption—Economic Growth Nexus by Source, in Germany: Conditions of a Successful E... 6 - The Case for a Demand Side Management (DSM) Intervention 7 - Conclusions and Policy Implications Acknowledgments References Further Reading Chapter 4 - The Role of Potential Factors/Actors and Regime Switching Modeling 1 - Introduction 2 - Determinants of the Relationship Between Energy and Economic Growth 2.1 - Production Factors 2.2 - International Trade 2.3 - Financial Development 2.4 - Pricing Structures 2.5 - Economic Structures 2.6 - Different Energy Types and Fuels 2.7 - Population and Urbanization 2.8 - Miscellaneous Factors 2.8.1 - Militarization and national defense 2.8.2 - Tourism development 2.8.3 - Energy security 2.8.4 - Political considerations 3 - Regime Switching and Time-Varying Models 3.1 - Regime Switching Approach 3.2 - The Time-Varying Approach 4 - Concluding Remarks References Chapter 5 - Critical Issues to Be Answered in the Energy-Growth Nexus (EGN) Research Field 1 - Introduction 2 - Environmental Agreements and Research Opportunities in the EGN 2.1 - What Do International Agreements and National Efforts to Reduce Greenhouse Gas (GHG) (Emissions) Mean for the EGN Lit... 2.2 - An Application with Intertemporal Causality 3 - Difference Between EGN Results from a Single Country and EGN Results from Panel Countries Which Contain the Single Country 3.1 - Application: Single Country Versus Multiple Countries 4 - Recent Shifts in the EGN: Sustainability 5 - Recent Shifts in the EGN: Energy Intensity and Energy Efficiency 5.1 - Definitions and Scope 5.2 - Stylized Facts About the Energy Intensity of Major Economies and Major Industries of the World 5.3 - Energy Efficiency and the EGN 5.3.1 - An example of energy efficiency measurement in the EGN 5.4 - Suggested Shifts in the EGN: The Energy-Water Nexus and the Water- Energy-Food (WEF) Nexus 6 - Literature Segregation Paradigms 7 - Conclusions References Further Readings Part 2 - The Econometrics of the Energy-Growth Nexus Chapter 6 - Practical Issues on Energy-Growth Nexus Data and Variable Selection With Bayesian Analysis 1 - Introduction: The Virtues of Panel Data 2 - Part 1: Practical Issues on Data Use in the EGN 2.1 - Data Choice in the EGN Research 2.1.1 - The Worldbank Databases (Available from: at://databank.worldbank.org/data.databases.aspx.) 2.1.2 - The OECD (at: stats.oecd.org) 2.1.3 - Eurostat and other country statistical agencies (at: ec.europa.eu/eurostat/data/database) 2.1.4 - International Energy Agency (at: www.eia.gov/tools) 2.1.5 - British Petroleum data (at: www.bp.com) 2.1.6 - Thomson Reuters Datastream (at: financial.thomsonreuters.com) 2.1.7 - ODYSSE and MURE database (at: indicators.odyssee-mure.eu) 2.1.8 - Penn World Tables (PWT) (at: cid.econ.ucdavis.edu) 2.1.9 - “Data in Brief” Journal by Elsevier 2.1.10 - Database of Political Institutions (DPI) (at: econ.worldbank.org) 2.1.11 - Various micro data 2.2 - Data Type and Frequency in the Energy-Growth Nexus Case study 1: daily data Case study 2: weekly data Case study 3: monthly data Case study 4: quarterly data Case study 5: annual data 2.3 - Missing Data, Solutions, and Transformations 2.3.1 - Variable transformation into logs and first differences 2.3.2 - Panel data estimations 2.3.3 - Interpretation of the cointegration equation 2.4 - Principal Component Analysis as a Method of the Variable Number Reduction 3 - Part 2: Variable Selection With Bayesian Analysis 3.1 - Introduction to Bayesian Inference 3.1.1 - Prior information, data, and posterior inference 3.1.2 - Literature review: Bayesian statistics in the EGN context 3.2 - Bayesian Estimation and Prediction 3.2.1 - Bayesian estimation, credible intervals, and its interpretation 3.2.2 - Posterior predictive inference 3.2.3 - Hypothesis testing 3.2.4 - Bayesian Hypothesis testing and Bayes factors 3.2.5 - An extension of hypothesis testing 3.2.5.1 - Model selection 3.2.6 - A particular problem: variable selection 3.2.7 - The robust prior 3.2.8 - Prior over the model space 3.2.9 - Posterior inferences in variable selection 3.2.10 - BayesVarSel an R package for Bayesian Variable Selection 3.3 - Selecting Influential Variables in the EGN 3.3.1 - Data and sources 3.3.2 - Model and variable selection 3.3.3 - Results 3.3.3.1 - Aggregate growth results 4 - Concluding Remarks 4.1 - Part 1 4.2 - Part 2 References Further Readings Chapter 7 - Current Issues in Time-Series Analysis for the Energy-Growth Nexus (EGN); Asymmetries and Nonlinearities Case S... 1 - Introduction 1.1 - The EGN in Pakistan 2 - Literature Review 2.1 - The Up-to-Date Evolution of Bivariate Analysis in the EGN 2.2 - The Evolution of the Multivariate Framework in the EGN 3 - The Modeling, Data, and Methodology 4 - The NARDL Bounds Testing Approach for Asymmetric Cointegration 5 - Results and Discussion 6 - Conclusion and Policy Implications References Further Readings Chapter 8 - Panel Data Analysis in the Energy-Growth Nexus (EGN) 1 - Introduction: The Benefits and Limitations of Using Panel Data in the EGN 2 - The Steps of Panel Data Analysis in the EGN 2.1 - Testing for Cross-Sectional Dependence 2.2 - Testing for Stationarity 2.3 - Testing for Panel Cointegration in the EGN 2.4 - Testing for Panel Causality in the EGN 2.5 - Panel Estimation in the EGN 2.5.1 - Estimating noncointegrated panels 2.5.2 - Estimating cointegrated panels 2.5.3 - Estimating heterogeneous dynamic cointegrated panels: a panel autoregressive distributed lag approach 3 - An Empirical Example for the G7 Countries 3.1 - The Model and the Data 3.2 - Investigating Cross-Sectional Dependence 3.3 - Investigating Stationarity 3.4 - Investigating Panel Cointegration 3.5 - Coefficient Estimation From the Cointegrated Panel 3.6 - Investigating Panel Causality 4 - Conclusions References Further Reading Chapter 9 - Testing for Causality: A Survey of the Current Literature 1 - Introduction 2 - Bivariate Causality Tests in Time Series 2.1 - Causality Tests Without Cointegration 2.2 - Causality Tests With Cointegration 3 - Multivariate Causality Tests in Time Series 3.1 - Causality Without Cointegration 3.2 - Causality With Cointegration 4 - Alternative Causality Test Approaches in Time Series 5 - Asymmetric Causality 6 - Linear Panel Causality 7 - Nonlinear and Nonparametric Causality 8 - Conclusion References Further Reading Chapter 10 - Simultaneous Equations Modeling in the Energy-Growth Nexus 1 - Introduction and Background 1.1 - Energy Consumption and Economic Growth 1.2 - Air Pollution and Economic Growth 1.3 - Energy Consumption, Economic Growth, and Air Pollution 1.4 - A Summary of the Previous Literature 2 - A Simultaneous Equations Model for Economic Growth (Income Level), Energy Consumption and Air Pollution 2.1 - Production Function 2.2 - Function for Energy Consumption 2.3 - Air Pollution Function 3 - Simultaneous Equations Modeling: Key Concepts 3.1 - Structural Equations 3.2 - Reduced-Form Equations 3.3 - The Identification Problem 3.4 - Nonlinearity in Endogenous Variables 4 - Simultaneous Equations Modeling: Estimation Methods 4.1 - Cross-Sectional Analysis 4.1.1 - Single-equation estimation methods 4.1.1.1 - Two-stage least squares 4.1.1.2 - Other estimation methods 4.1.2 - System estimation methods 4.1.2.1 - Three-stage least squares 4.1.2.2 - Other methods 4.1.3 - Specification tests 4.2 - Time-Series Analysis 4.3 - Panel Data Analysis 4.3.1 - Single-equation estimation methods 4.3.1.1 - The 2SLS 4.3.1.2 - Difference and system GMM estimation 4.3.2 - System estimation methods 4.4 - Single-Equation Versus System Estimation Methods 4.5 - Different Instruments for Different Equations 5 - Conclusions Appendix Acknowledgments References Chapter 11 - The Energy-Growth Nexus (EGN) Checklist for Authors 1 - Introduction 2 - Snapshot of the Literature on the Energy-Growth Nexus (EGN): Missing Pieces from the Puzzle 3 - Data and Methodologies: Done Those, Been There, so What’s New? 4 - Findings and Transferability 5 - Reviewer’s Turn: Some Common Questions and Comments Raised 6 - Concluding Remarks References Conclusions Part 1: The Economics of the Energy-Growth Nexus Part 2: The Econometrics of the Energy-Growth Nexus Index Back cover