ENERGY USE AND ECONOMIC GROWTH IN SPAIN. A COINTEGRATION ANALYSIS

The impact of the energy use on the economic growth has led to divergent opinions. While some analysts suggest that the energy is the prime source of value, others consider that it is neutral to growth. In the present study, we are trying to test the link between the energy use and the output growth, both on long and short-term, in the case of Spain. Starting from the neo-classical one-sector aggregate production technology function, where the input variables are the capital, the labour and the energy consumption, and the output variable is the real GDP, we will develop a vector error-correction (VEC) model to test if there is a Granger causality between the output growth and the energy use on short term. For the long term, we will use the Johansen method to identify the presence of some cointegration vectors between the output, labour, capital and energy use. The results may have implications for the development of the public policy strategies.