Can Economic Growth Last? Seriously.

Abstract

This study analyses the relationship between energy consumption and economic growth rate in the period 1980 - 2002 in Sweden. A specific question that is addressed throught this study is what is the threshold energy consumption rate for Sweden. In addition, we try to answer a question, if there is statistical significant relationship between energy consumption and growth. In this paper, we use econometric methodology of the threshold estimation proposed by Hansen (2000). Hansen, develops new tests for threshold effects, estimates the threshold parameter, and constructs asymptotic confidence intervals for the threshold parameter. The primary idea behind the Hansen test for threshold estimation is that an exogenously given variable, called «threshold variable», is used to split the sample in two groups or regime, which can or cannot be a regressor. This theory derives the asymptotic distribution of the Ordinary Least Squares (OLS) estimates of the threshold parameter.

Key words:

• Hansen test
• Energy consumption
• Economic growth
• Sweden