engleski

The role of energy in economic growth: The case of Croatia

During the last two decades there have been a number of papers dealing with the causality between economic growth and energy, especially energy consumption. Strong interdependence and causality between economic growth and energy consumption is a stylized economic fact, but the existence and direction of causality is still not clearly defined. Broadly speaking, all papers could be divided in two groups. The first one consists of papers that argue that energy is a crucial input of production and therefore the necessary requirement for economic and social development, but potentially it could also be a limiting factor to economic growth. On the other hand, the other group of papers argued that energy has no significant impact, which is known as neutrality hypothesis. To the best of the author’s knowledge, there are no studies addressing the causal relationship between energy and economic growth in the case of Croatia. The purpose of this paper is, therefore, to investigate the existence and direction of causality between economic growth and energy consumption (in industry and households) and specifically oil consumption. The paper will also analyse the causal relationship between economic growth and net energy imports, as well as the relationship between economic growth and primary energy production in Croatia and to obtain policy implications from the research results. The paper is organized in the following fashion. Section 2 gives the overview of the theoretical and empirical findings on the role of energy in economic growth. Section 3 describes the econometric methodology and presents the obtained empirical results. Final section contains the conclusions.

energy ; economic growth ; Error Correction Model (ECM) ; Croatia

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