ENERGY INTENSITY, ENERGY MIX AND ECONOMIC PERFORMANCE IN EUROPEAN REGIONS: A DYNAMIC AND HETEROGENEITY ANALYSIS

Abstract

This study investigates the impact of energy intensity on economic performance of European countries with heterogeneity analysis which differ across regions. Applied technique is panel two step GMM from 1990-2020. This study estimated by using GMM estimation and the results have been reported on the basis of probability values of F-statistics, Hansen-J statistics and under-identification tests. The Kleibergen-Paap rk LM statistic with chi-square p-values of under-identification test are used to check the identification of the model. The chi-square probability values of Kleibergen-Paap rk LM statistics in all of the models of current study are highly significant which shows that model is identified. Moreover, Hansen J statistics are included to check validity of instruments.  Results predict that the coefficient of energy intensity is negative and statistically significant in almost all regions of Europe. The probability values of F-statistics of model reveal that the model used in the study are highly significant. Results of concerned variables in this variability of energy economic progress is same with aspect to region wise heterogeneity but South European region is slightly less energy efficient and having more energy intensities than Nordic and Central European regions. Based on the aforementioned results, here provide a set of recommendations for policy implication.