Regional - Microlevel Approach To Energy-Growth Nexus
A serious problem with analysing energy consumption – economic growth interaction for regions is incompatibility of the two data sources. Energy consumption data cannot be used with the economic data on regional level since usually the borders of the regional energy distributional areas do not fully correspond to administrative borders which are used by economic indicators. We use a proprietary data set of energy consumption for Croatian counties to explore the relationship between economic growth and energy consumption using regional level data over a eleven year period. This allows us to revisit the energy-growth nexus dilemma from a microlevel point of view. We find significant policy implications stemming from joint movement between the counties and long term positive influence of energy, capital and labour on industrial output.
Keywords - Microlevel; Energy Consumption; Economic Growth; Causality; Pooled Mean Group Estimator