Economic Growth and Energy Consumption: Comparative Analysis of V4 and the “Old” EU Countries

Abstract

Our paper uses the panel data approach to investigate the relationship between energy consumption and economic growth for V4 countries and for the 14 EU “old” Member States from 1995 to 2012. We define the differences between the estimated results for these two groups of countries. We assume that there is a positive relationship between energy use and economic growth. Our results reveal that in the countries in question energy consumption is not neutral to economic growth. The estimation of GDP equation indicates that that energy consumption is positively related to economic growth. Energy consumption is a pro-growth variable which means that the increase in energy consumption causes the increase of economic growth. Moreover, the energy consumption in relation to GDP growth in the V4 countries seems to be more efficient than in the “old” EU countries. Furthermore, our results point at the individual growth rate effect of GDP for every country that was not captured by the estimated model.