Energy-Economy Nexus in Emerging Economies: A Dynamic Panel Data Analysis

Abstract

Keeping in view the strong link between energy use and economic growth along with associated environmental costs and contradictory findings, this study re-investigates the energy-economy nexus for a group of 45 emerging economies. Empirical estimation of the modified Solow growth equation is carried out through pooled mean group estimator, impulse response functions and forecast error variance decomposition for the period 1991-2015. Our empirical results show that energy use and economic growth are interdependent (feedback hypothesis) in case of emerging economies. Overall, the analysis demonstrates that energy is the mainstay of emerging economies. Therefore, to maintain the ongoing pace of