• Table of Contents
    • Abstract
    • Keywords
    • Article
      • Introduction
      • Factors affecting the linkage between energy and GDP
        • Introduction
        • Substitutability of energy and capital
        • Energy efficiency and technological change
          • The rebound effect
        • Energy quality and shifts in mix of energy inputs
        • Shifts in the composition of output
        • The theory of energy in economic production and growth
          • Energy as a factor of production
      • The mainstream theory of growth
      • The ecological economics approach
      • Synthesis: unified model of energy and growth
        • The elasticity of energy with respect to GDP
        • Testing for causality between energy and GDP
        • Gaps in knowledge
    • See Also
    • Bibliography
    • How to cite this article

energy-GDP relationship

David I. Stern
From The New Palgrave Dictionary of Economics, Online Edition, 2015
Edited by Steven N. Durlauf and Lawrence E. Blume
Back to top


Energy use and GDP are positively correlated, although energy intensity has declined over time and is usually lower in richer countries. Numerous factors affect the energy intensity of economies, and energy efficiency is obviously one of the most important. However, the rebound effect might limit the possibilities for energy efficiency improvements to reduce energy intensity. Natural science suggests that energy is crucial to economic production but mainstream economic growth theory largely ignores the role of energy. Ecological economists and some economic historians argue that increasing energy supply has been a principal driver of growth. It is possible that historically energy scarcity imposed constraints on growth, but with the increased availability of modern energy sources energy’s importance as a driver of growth has declined. Empirical research on whether energy causes growth or vice versa is inconclusive, but meta-analysis finds that the role of energy prices is central to understanding the relationship.
Back to top


Back to top


Back to top

How to cite this article

Stern, David I. "energy-GDP relationship." The New Palgrave Dictionary of Economics. Online Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2015. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 23 February 2018 <http://pde-test1.pde.pm.semcs.net/article?id=pde2015_E000340> doi:10.1057/9780230226203.3947

Download Citation:

as RIS | as text | as CSV | as BibTex