ID306 SianglengWong Energy consumption and energy RD in OECD Perspectives from oil prices and economic growth by 6en78I

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									       The 13th International Convention of
      the East Asian Economic Association at
       Hotel, Singapore, October 19-20 2012




                          Convention Theme:
"Opportunities and Challenges for Asian Economies in the New Millennium"




            Siang Leng Wong, Youngho Chang, Wai-Mun Chia
Division of Economics, School of Humanities and Social Sciences, Nanyang
      Technological University, 14 Nanyang Drive, Singapore 637332
 Energy consumption and energy R&D in OECD: Perspectives from
                oil prices and economic growth
                     Siang Leng Wong, Youngho Chang, Wai-Mun Chia

  Division of Economics, School of Humanities and Social Sciences, Nanyang Technological
                     University, 14 Nanyang Drive, 637332, Singapore




                                          Abstract

Oil price hikes are expected to stimulate energy R&D and cause a substitution from oil to
alternative energy consumption, such as renewable energy. Economic growth, on the other
hand, is expected to raise both energy consumption and energy R&D. Using the Nerlove
partial adjustment model on OECD data from period 1977 to 2007, this study finds that oil
price hike is not effective to stimulate cleaner forms of energy consumption as OECD
countries shall remain heavily dependent on oil, and countries without oil reserves may
even raise their coal consumption. However, oil price hike is a contributing factor to higher
renewable energy R&D though it is comparatively less influential in terms of magnitude on
both energy consumption and energy R&D than economic growth. Economic growth is a
driver to promote cleaner forms of energy, from coal to oil, gas and renewable energy gas,
especially for countries with oil reserves. It also contributes to higher levels of energy R&D
amongst the countries without oil reserves.



Keywords: Renewable energy, coal consumption, gas consumption, fossil fuels, GDP per
labor.
1. Introduction

  Much interest has been devoted to answer the question on whether oil consumption is elastic

towards changes in oil price and GDP (e.g. Wadud et al., 2009; Ramanathan, 1999; Ramanathan and

Subramanian, 2003). Elasticity of oil has also been conducted at a disaggregated level, using a variety

of gasoline products (e.g., Huntington, 2010; Iwayemi et al, 2010). Own price elasticities of natural

gas are also quite well-studied (e.g., Cornillie and Fankhauser, 2004). Few studies have modeled the

determinants of renewable energy consumption and the different energy R&D. In this study, we

evaluate the cross price elasticities of other energy consumption and energy R&D towards changes

in oil prices and GDP.


  Oil has an eminent position as the principal energy source, accounting for 36.3 percent of OECD

primary energy consumption in 2010 (International Energy Agency (IEA), (2011)). Cooper (2003) and

Narayan and Wong (2009) make the case that oil consumption is rather price-inelastic. The results of

Goodwin et al. (2004) also show that the own-price elasticity of oil consumption ranges from 0.25 in

the short-run to 0.64 in the long-run. Nonetheless, Narayan and Wong (2009) document that oil

consumption is more responsive to changes in GDP than oil prices, in terms of both magnitude and

statistical significance. Contrary to these studies, Wadud et al. (2009) argue that there is no

existence of any meaningful relationships in the long-run between oil consumption, oil price and

GDP.


  Understanding the responsiveness of different energy consumption and energy R&D towards

changes in oil prices is critical to anticipate whether countries shift away to become less oil-reliant

with soaring oil prices. Renewable energy, being a good form of substitute for oil, is of great concern

to the surging climatic interest groups which focuses on reducing carbon emissions. Economic theory

implies that hikes in the oil prices, such as the oil crises in the 1970s, exposed countries to huge

shocks in their production and industrial processes. Rising cost of production from higher oil prices

would drive households and businesses to substitute away from consuming oil to other energy
resources. Energy R&D (both fossil fuel and renewable energy) should also be stimulated to reduce

the energy costs and raise energy efficiency.


  Contradicting with the economic theory that countries substitute away from oil to other forms of

energy (which include gas, coal and renewable energy) during oil price hikes is the results of

Sadorsky (2009). It asserts that oil price hike, instead of promoting renewable energy, may even

cause a small decline in renewable energy consumption in the G7 countries. The International

Energy Agency (IEA) also made the prediction that oil shall remain as the main fuel type for the

transportation sector till 2030 with a lack of substitute for petroleum-based liquids. The study of

Bilgen et al. (2004) asserted that countries would slowly increase their natural gas consumption over

time. These suggest that countries are reluctant to become more renewable energy-based and pose

as a cause of concern for the environment.


  On the other hand, economic theory predicts that as countries experience higher GDP, more

energy consumption is required as the industries, commercial sectors and consumer sectors expand.

Higher energy demand also translates into more alternative energy usages. Energy R&D, regardless

of fossil fuels or renewable energy, will also be fuelled by economic growth to meet the higher

energy demand. Alternative energy will become particularly important as economic growth exerts

more pressure on oil consumption, thus causing depletion in oil reserves.


  A strand of recent literature investigated other macroeconomic variables, such as vehicle stock

(Bentzen, 1994) and urban sprawl (Nadaud, 2004), on energy consumption, in specific oil

consumption. Nonetheless, this study acknowledges that oil prices and GDP are the two main

determinants of any change in energy consumption or energy R&D. The purpose of this study is to

extend the existing literature from oil to other forms of energy consumption and energy R&D,

providing a comprehensive analysis of the dynamic relationship amongst the different energy

consumption and energy R&D with respect to both changes in oil prices and GDP. This assesses the
reliance of countries on oil and the potential substitution away to renewable-energy based

economies.


  With the use of the Nerlove partial adjustment model (NPAM), this study finds little evidence of

substitution away from oil during periods of oil price hikes, concurring with existing literature that oil

is an important ingredient in production and rising oil prices do not deter the consumption of oil.

The inelastic oil consumption indicates that the alternative energies are not good substitutes for oil,

possibly due to the limitation of technologies. Energy R&D, are hence, promoted during periods of

oil crises to enhance energy efficiency for productions.


  This study also shows that growth in GDP per labor, on the other hand, is facilitating cleaner forms

of energy consumption and the investment of more renewable energy R&D. Interestingly, countries

with oil reserves are comparatively consuming considerably more renewable energy as compared to

countries without oil reserves during periods of economic growth. As the influence on energy

consumption and energy R&D via the GDP channel is greater and more significant than that via the

oil price channel, countries can be slowly shifting away from heavy reliance on oil.


  Preceding the estimations of both the dynamic relationship between energy consumption or

energy R&D with oil price and economic growth, this study attempts to prevent endogenity and

omitted variable bias through the use of two-stage-least-squares (TSLS) regressions to avoid

endogenity and ensure unbiased estimations. Existing studies working on similar issues have yet to

employ instrumental variables to segregate and determine the true predicted effects of one variable

on another.


  The contributions of this study are manifold. First, this study examines the effects of a change in

oil price and GDP on other forms of energy consumption and energy R&D, which is a gap in current

literature. In addition, instead of analyzing energy R&D investments, this study looks at the total
energy technologies. Past invested resources into the R&D are also accounted for as they still

contribute towards the economies.


  Second, this study implements not only the time series responses of individual countries, it also

implements the panel responses of country groups in terms of their oil endowment. Differences in

oil endowment can influence the willingness of countries to use other forms of energy as

alternatives. Existing studies usually concentrate on individual countries. Wadud et al. (2009), Eltony

and Al-Mutairi (1995), and Cheung and Thomson (2004), Narayan and Wong (2009) have

investigated the US, Kuwait, China, and Australia, respectively.


  The balance of the paper is organized as follows. Section 2 provides an overview of the

responsiveness of different energy consumption and R&D towards changes in oil prices and GDP.

Section 3 presents the methodologies, describing the NPAM model for determining the dynamic

linkages amongst energy consumption, accumulated energy R&D, oil prices, and income. Section 4

discusses the data and reviews the responsiveness of various energy consumption and accumulated

energy R&D towards changes in oil prices or output. Section 5 concludes.


2. An Overview of Changes in Energy Consumption and Energy R&D


  This study provides comprehensive examinations on the dynamic relationship between (i)

different energy consumption with oil prices and economic growth and (ii) different energy R&D

with oil prices and economic growth as causal nexus appears to exist amongst these variables.

Energy consumption is observed to be strongly correlated with oil prices and economic growth from

Figures 1- 2. Changes in energy R&D (both fossil fuels and renewable energy) also appear to be

interrelated with changes in oil prices and GDP as depicted in Figure 3.


  Adjustments in oil, gas, coal and renewable energy consumption (see Figure 1) show co-

movements with adjustments in oil prices and GDP (see Figure 2). Periods of economic growth

during 1978-1979, 1983-1990, 1998-2000, and 2004-2005 (see Figure 2) tend to be associated with
higher energy consumption (see Figure 1). Growth in energy consumption from renewable energy

appears to be highest, followed by coal, gas, and oil. Likewise, during periods of recession in 1979-

1982 and 2001-2003 (see Figure 2), there is adverse impact on energy consumption (see Figure 1).

However, oil appears to experience the least impact.


  From Figure 2, periods of oil price hikes (in 1978-1979 and 1998-2000) correlates with higher

energy consumption in Figure 1. Periods of lower oil prices (2001-2003) in Figure 2 also correlates

with lower energy consumption in Figure 1.


                                  [Insert Figures 1 - 2 about here]


  Energy R&D (see Figure 3) appears to experience greater increments during economic growth

(during 1978-1979 and 2004-2005) but the little co-movement is observed between energy R&D and

economic recession. Energy R&D also show possible correlation with changes in oil prices, 1978-

1979 show both higher energy R&D (see Figure 3) and higher oil prices (see Figure 2).


                                    [Insert Figure 3 about here]


3. Model and Methodology


  This study utilizes the Nerlove partial adjustment model (NPAM) to analyze the responses of

different energy consumption and different energy R&D towards changes in oil prices and GDP per

labor.


3.1. Two-Stage-Least Squares


  Before all the estimations, two-stage-least-squares (TSLS) regressions are performed to segregate

the movements of variables that are uncorrelated with the error terms following Stock and Watson

(2003). The instruments used for output per labor include foreign direct investments and tertiary

enrolment rates. On the other hand, Aschea et al (2003) found oil prices as weakly exogenous.
Hence, oil prices are treated as exogenous in this study. Hausman test and Sargan tests1 have been

carried out, confirming the presence of endogeneity and the validity of the instruments, respectively.


3.2. Nerlove's Partial Adjustment Model (NPAM) with Oil Prices and Output per Labor


       Nerlove's partial adjustment model (NPAM) is used to model the responses of different energy

consumption and R&D towards changes in oil prices and GDP. The NPAM not only estimates the

speed of adjustment of the dependent variables towards changes in the covariates but also

postulates the short and long run responses to changes in the covariates.


       Although the NPAM has been frequently used to derive the elasticity of crude oil demand to

changes in oil prices or output (e.g., Cooper, 2003; Maddala et al, 1997; Van Benthem and Romani,

2009), this framework has not been used to study the elasticities of different energy consumption

and accumulated energy R&D to changes in oil prices and output per labor. The following

specification is used to parameterize the effects on different energy consumption or different

accumulated energy R&D with respect to changes in oil prices and output per labor.


                             Z t  1  (1   ) Z t 1   2 OPt   3 Gdp t  u t


       where OPt and Gdpt represent the crude oil prices and the output per labor, respectively. Z t

represents the renewable energy consumption per labor, oil consumption per labor, coal

consumption per labor, gas consumption per labor, accumulated renewable energy R&D per labor or

accumulated fossil fuel R&D per labor. Dividing these variables by the labor size allows for

comparison between large and small countries. The time for adjustment is characterized as λ, and a

higher value signals faster speed of adjustment. β₂λ and β₃λ represent the elasticity of Z t with

respect to changes in oil prices and output per labo. Hence, β₂ and β₃ are the long run responses of




1
    Hausman test and Sargan test results could be furnished upon request.
    Z t towards changes in oil prices and output per labor. All variables are expressed in the natural

logarithms form.


      The model is estimated using the system GMM estimator which modifies the Arellano-Bond

estimator (first-differenced GMM) with the use of lagged first-differences of the variables as

instruments. Using lagged dependent variables as covariates in the model could cause unobserved

fixed or random panel-level effects and these unobserved panel-level effects could be correlated

with the lagged dependent variables. The use of system GMM estimator serves to provide consistent

estimates in the presence of the lagged dependent variables.


    4. Results and Interpretation


    4.1. Data


      In this study, we use the annual data of 20 OECD countries from 1977 to 2007. According to

British Petroleum (BP) statistics, out of the 20 OECD countries, 7 countries2 are endowed with oil

reserves and 13 countries3 are not endowed with oil reserves. Statistics on output per labor, energy

consumption, official exchange rate, real exchange rate index, fossil fuels over total energy

consumed and GDP deflator are obtained from World Development Indicators (WDI). Data on oil

consumption, coal consumption, nuclear energy consumption and gas consumption are retrieved

from British Petroleum (BP). Data on renewable energy R&D and fossil fuel R&D are gathered from

International Energy Agency (IEA). Data of renewable energy consumption are calculated by

subtracting fossil fuel consumption and nuclear energy consumption from total energy consumption.

Table 1 provides the descriptions of the variables used.


                                         [Insert Table 1 about here]



2
  The 7 countries with oil reserves are namely, Australia, Canada, Denmark, Italy, Norway, the United Kingdom,
and the United States of America.
3
  The 13 countries without oil reserves are Austria, Belgium, Finland, France, Ireland, Japan, the Netherlands,
New Zealand, Portugal, Spain, Sweden, Switzerland, and Turkey.
    Real national oil prices are used as the oil prices at national levels are subjected to price controls,

taxes, exchange rates fluctuations. The real national oil prices are calculated by first converting the

world's oil prices (retrieved from BP) in dollars to the currencies of the respective countries. The

world oil prices denominated in the respective countries' currencies are then deflated (Cunado and

Perez de Garcia, 2003) using the GDP deflator of the respective countries.


    The accumulated energy R&D that account for the total invested gross fixed capital formation,

fossil fuel and renewable energy R&D are calculated. We first assume that the period 1977-2007

faces similar trend in annual gross increment as the period 1875-1976. Then we assume that the

accumulated energy R&D evolves according to the following specification:


                                                                         t
                                    K S t 1  (1   t ) K S t  (1         )I t
                                                                         2


  where K S t represents either the accumulated renewable energy R&D per labor or accumulated

fossil fuel R&D per labor, I t represents the newly invested energy R&D and  t represents the

energy R&D depreciation rate at time t.


    For energy R&D, it is assumed to increase in tandem with the electricity patents, which increases

by 15 percent annually. And a constant depreciation rate of 15 percent is assumed (Hall, 2007).

Accumulated renewable energy R&D, unlike estimates of capital stock and accumulated fossil fuel

R&D, only starts from 1977 as earlier renewable energy R&D investments are negligible.


  4.2. Dynamic Responses to Oil Prices and Economic Growth (Energy Consumption)


    Tables 2 - 5 show the responsiveness of renewable energy consumption per labor, oil

consumption per labor, coal consumption per labor and gas consumption per labor to changes in oil

prices and GDP per labor in both the short- and long-run. Some general trends are observed. First,

columns (4) and (6) of Tables 2 - 5 suggest that economic growth drives countries to diversify into

other cleaner forms of energy consumption: from coal to renewable energy, oil and gas. Column 3
shows that renewable energy, oil and gas consumption increase at 0.125 (see Table 2), 0.180 (see

Table 3), and 0.405 (see Table 5), respectively, in the short run whereas coal consumption declines

with economic growth (see Table 4). Gas and oil have less mercury content and greenhouse gas

emissions as compared to coal. This finding suggests that after attaining a certain standard of living

with higher GDP per labor, countries are more concerned about other intangible issues which

include reduction of greenhouse emissions.


                                      [Insert Tables 2 - 5 about here]


    Second, column (4) shows that countries with oil reserves increase energy consumption from

renewable energy (see Table 2) by the largest amount at 1.239, followed by natural gas at 0.772 (see

Table 5) and oil at 0.084 (see Table 3). Column (4) shows that countries without oil reserves, on the

other hand, increase energy consumption from natural gas (see Table 5) by the largest amount at

0.242, followed by oil at 0.200 (see Table 3) and renewable energy at 0.035 (see Table 2). The

countries with oil reserves rely less on oil and natural gas as exporting them to the countries without

oil reserves could be more profitable. In 2010, the average pump prices for gasoline and diesel fuel

are 20% and 9%4 higher in the 13 OECD without oil reserves than the 7 OECD countries with oil

reserves. Nonetheless, natural gas could be one of the more widely deployed energy due less carbon

dioxide emissions compared to oil and is more efficiency in extraction of energy as compared to

renewable energy.


    Third, column (6) of Tables 2- 5 indicates that countries with oil reserves potentially use more

energy during economic growth than countries without oil reserves in the long run. The magnitude

of GDP per labor on renewable energy, oil, and gas consumption are 1.876, 0.701, and 2.205,

respectively, for countries with oil reserves. These are higher than that for countries without oil

reserves at 0.337, 0.681, and 0.917, respectively.

4
  Calculations are derived using statistics from World Development Indicators, and values denoted in 2010
US$. The average pump prices for gasoline are $1.525 and $1.835 in the OECD countries with and without oil
reserves, respectively. The average pump prices for diesel fuel are $ 1.472 and $1.608, respectively.
    Fourth, as shown in column (3) of Tables 2 - 5, countries generally reduce energy consumption

during the periods of oil price hike with the exception of significant increment in coal consumption

for the countries without oil reserves at 0.026 (see Table 4). These countries are not endowed with

oil reserves but they could be endowed with coal reserves; hence, coal can substitute for oil during

oil price hikes. However, generally, during periods of oil crises, countries are expected to shift away

from energy-intensive industries to reduce the input costs. As oil remains the most efficient source

of energy, reduction of oil consumption is the least at -0.001 (see Table 3). Generally, gas, renewable

energy, and coal consumption deplete 0.042 (see Table 5), 0.024 (see Table 2), and 0.008 (see Table

4), respectively in the short run. Crude oil and natural gas are jointly discovered together. The

factors causing higher oil prices could lead to higher gas prices as well, leading to a decline in gas

consumption.


    Lastly, energy consumption is more forthcoming to changes in output per labor than changes in

oil prices, suggesting that fluctuations in oil prices are not very useful in directing more energy

consumption towards cleaner alternative energy sources. The shifts towards renewable energy-

based economies depend mostly on the economic prospects and oil is still the most efficient energy

source. One possible solution is to encourage energy R&D to enhance the efficiency and lowering

the cost of generating other types of energy and hence promoting other cleaner forms of energy as

competitive substitutes for oil.


  4.2.1. Responses of Renewable Energy Consumption to Oil Prices and Economic Growth


    Table 2 shows the responsiveness of renewable energy consumption per labor towards changes

in oil prices and GDP per labor.


    First, column (3) generally shows that countries reduce their renewable energy consumption

during periods of oil crisis. Countries usually reduce their overall energy consumption and use the

more efficient oil energy source. There are three countries with oil reserves (Norway, the UK and the
USA) and four countries without oil reserves (Japan, New Zealand, Spain and Turkey) reducing their

renewable energy consumption. However, there are still countries which increase renewable energy

consumption: two countries with oil reserves (Australia and Italy) and one country without oil

reserves (Belgium). This suggests that renewable energy can be a good form of substitute for oil in

these countries.


    Second, column (4) shows that income elasticity of renewable energy consumption is higher for

countries with oil reserves (1.239) than countries without oil reserves (0.035), suggesting that

countries with oil reserves have a greater tendency to reduce carbon dioxide emissions and turn

more towards renewable energy than countries without oil reserves during periods of economic

growth.


  4.2.2. Responses of Oil Consumption to Oil Prices and Economic Growth


    Table 2 shows the responsiveness of oil consumption per labor towards changes in oil prices and

GDP per labor.


    First, column (3) shows that when oil prices are higher, countries tend to use less oil

consumption. This is only significant in the countries with oil reserves, but not without oil reserves.

This is also significantly evident in three countries with oil reserves (Italy, the UK and the US) and five

countries without oil reserves (Belgium, Japan, Portugal, Spain and Turkey). Oil consumption has a

tendency to decrease 0.028 to 0.041 for most of the countries, with Turkey having the highest

decline at 0.151. This suggests that Turkey's economy could be the most susceptible to oil price

change.


    Second, column (4) reports that most countries increase their oil consumption during periods of

higher GDP per labor. Countries with oil reserves have a smaller increment in oil consumption of

0.084 than countries without oil reserves at 0.200 in the short run. However, the magnitude is rather

similar in the long run at 0.701 and 0.681, respectively (see column (6)). Amongst the countries with
oil reserves, Canada is the only country which has GDP per labor significantly promoting oil

consumption at 0.179, three other countries (Italy, Norway, the UK) have GDP per labor negatively

causing oil consumption. On the other hand, countries without oil reserves have five countries

(Belgium, the Netherlands, New Zealand, Portugal and Turkey) with GDP per labor increasing oil

consumption from 0.354 to 0.638 respectively.


    However, there are two countries (Sweden and Switzerland) which decrease their oil

consumption during economic growth. In addition, Table 2 indicates their renewable energy

consumption increases during economic growth. This suggests that these two countries can be the

leading countries which shift to become more renewable energy-based.


  4.2.3. Responses of Coal Consumption to Oil Prices and Economic Growth


    Table 4 shows the responsiveness of countries' coal consumption with respect to changes in oil

prices and GDP per labor.


    First, the panel results of column (3) shows that countries with oil reserves in general reduce

their coal consumption per labor at 0.019 but countries without oil reserves increase their coal

consumption at 0.026, suggesting that countries without oil reserves could perceive coal as a good

form of substitute for oil. There are two countries with oil reserves (Italy and the UK) increasing their

coal consumption and one country with oil reserves (Norway) reducing its coal consumption during

higher oil prices. There are three countries without oil reserves (Austria, Japan and New Zealand)

which increase their coal consumption and one country (Portugal) without oil reserves reducing its

coal consumption during higher oil prices.


    Second, we observe from column (4) that countries tend to reduce their coal consumption

during periods of economic growth, especially for the countries with oil reserves. Amongst the

countries with oil reserves, Denmark and the UK reduce their coal consumption. However, Italy and

the US increase their coal consumption. Amongst the countries without oil reserves, Austria,
Belgium, Ireland, and Switzerland decreases their coal consumption. On the other hand, Japan and

Turkey increase their coal consumption.


  4.2.4. Responses of Gas Consumption to Oil Prices and Economic Growth


    Table 5 shows the responsiveness of countries' gas consumption with respect to changes in oil

prices and GDP per labor.


    First, column (3) shows that countries reduce their gas consumption of around the same

magnitude when facing an increase in oil price. It is believed that gas and oil markets are highly

correlated. With the exception of Denmark which increases its gas consumption, two countries with

oil reserves (Italy and Norway) and three countries without oil reserves (Austria, Sweden and Turkey)

decrease their gas consumption.


    Second, column (4) presents that countries tend to increase their gas consumption when GDP

per labor is higher. It appears to be even so for the countries with oil reserves, possibly due to a

presence of gas reserves as well. A total of five countries with oil reserves (Australia, Canada, Italy,

Norway, and the UK) and seven countries without oil reserves (Austria, Belgium, Ireland, Japan,

Spain, Sweden, and Turkey) turn to higher gas consumption to meet their growing energy demand

from economic growth. Only Portugal appears to decrease its gas consumption.


  4.3. Dynamic Responses to Oil Prices and Economic Growth (Accumulated Energy R&D)


                                    [Insert Tables 6 - 7 about here]


    The responsiveness of accumulated renewable energy R&D per labor and accumulated fossil

fuel R&D per labor to changes in oil prices and output per labor are reported in Table 6 and Table 7,

respectively.


    Although energy R&D is more responsive towards economic growth than oil prices in terms of

magnitude, the influence of oil prices on energy R&D is a positive one. Higher oil prices appear to
increase both renewable energy R&D and fossil fuel R&D (see column (3) of Tables 6 - 7). The

influence of GDP per labor on renewable energy R&D for countries in column (4) is rather mixed (see

Table 6) but the influence of GDP per labor on fossil fuel R&D is evidently a negative one across the

individual countries (see Table 7).


  4.3.1. Responses of Renewable Energy R&D to Oil Prices and Economic Growth


    Table 6 shows the responsiveness of countries' renewable energy R&D with respect to changes

in oil prices and GDP per labor.


    First, column (3) shows that countries increase their renewable energy R&D per labor when

there is oil price hike. The panel result is significant for the countries with oil reserves at 0.016. There

are four countries with oil reserves (Australia, Canada, the UK and the US) and nine countries

without oil reserves (Austria, Belgium, Ireland, Japan, the Netherlands, New Zealand, Spain and

Sweden) increasing their renewable energy R&D per labor. Switzerland is the only exception which

reduces its renewable energy R&D.


    Second, column (4) indicates that countries with and without oil reserves respond differently

towards economic growth. Countries with oil reserves decrease their renewable energy R&D per

labor at 0.133 and countries without oil reserves increase their renewable energy R&D per labor at

0.120. Canada appears to decrease its renewable energy R&D by the largest amount (-1.611) and

Denmark decrease its renewable energy R&D by the largest amount (1.155).


  4.3.2. Responses of Fossil Fuel R&D to Oil Prices and Economic Growth


    Table 7 shows the responsiveness of countries' fossil fuel R&D with respect to changes in oil

prices and GDP per labor.


    First, column (3) reports countries without oil reserves increase their fossil fuel R&D during oil

price hikes with a magnitude of 0.009. Without oil and gas reserves, countries have to increase fossil
fuel R&D because of energy insecurity. Overall, there are two countries with oil reserves (the UK and

the US) and six countries without oil reserves (Austria, Belgium, Japan, the Netherlands, New

Zealand and Spain) increasing their fossil fuel R&D. New Zealand is found to increase fossil fuel R&D

by the largest amount (0.191) amongst the countries listed.


    Second, column (4) shows that most of the countries which reduce their fossil fuel R&D during

economic growth do not have oil reserves. The only three countries increasing their fossil fuel R&D

are Denmark, Italy, and Norway. Countries without oil reserves have less interest in depending on

developing fossil fuel-related technologies as they develop.


  5. Concluding Remarks


    Amid volatile and increasing oil prices, it is not well-studied as to how different types of energy

consumption and R&D are influenced by oil prices and economic growth. The novelty of this study is

undertaking a comprehensive approach covering the dynamic relationship between (i) energy

consumption, oil price and economic growth and (ii) energy R&D, oil price and economic growth.


    This study has several findings. First, both energy consumption and energy R&D are more

inelastic with respect to a change in oil price than a change in GDP per labor. Second, output per

labor has a major role to play in raising the usage of cleaner forms of energy, including renewable

energy, as compared to higher oil prices. Nonetheless, increment in the level of accumulated

renewable energy R&D per labor depends more on higher oil prices than growth in GDP per labor.

Third, interestingly, countries with oil reserves prefer to use more renewable energy but countries

without oil reserves prefer to use more oil during periods of economic growth. Nonetheless,

countries with oil reserves reduce their renewable energy R&D and countries without oil reserves

increase their renewable energy R&D during economic growth. Overall, economic growth assumes a

major role in promoting countries to adopt cleaner forms of energy as other forms of energy appear

not to be good substitutes for oil.
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-2001, IMF Working Paper, WP/04/67.

    Maddala, G.S., Trost, R.P., Li, H. and Joutz, F. (1997), Estimation of Short-Run and Long-Run
Elasticities of Energy Demand from Panel Data Using Shrinkage Estimators, Journal of Business &
Economic Statistics, 15(1).

     Nadaud, F. (2004), The demand for car gasoline in France: a long run econometric perspective,
6th IAEE European Energy Conference, 2--3 September, Zurich, Switzerland.

    Narayan, P.K. and Wong, P. (2009), A panel data analysis of the determinants of oil consumption:
The case of Australia, Applied Energy, 86, 2771--2775.

    Ramanathan, R. (1999), Short- and long-run elasticities of gasoline demand in India: an empirical
analysis using cointegration techniques, Energy Economics, 21, 321--30.

    Ramanathan, R. and Subramanian, G. (2003), An empirical analysis of gasoline demand in the
Sultanate of Oman using cointegration techniques, Pacific and Asian Journal of Energy, 13, 33--41.

   Sadorsky, P. (2009), Renewable energy consumption, CO₂ emissions and oil prices in the G7
countries, Energy Economics, 31, 456--462.
    Stock, J.H. and Watson, M.W. (2003), Introduction to Econometrics, Addison Wesley.

    Van Benthem, A. and Romani, M. (2009), Fuelling growth: what drives energy demand in
developing countries? Energy Journal, 30(3), 147--170.

    Wadud, Z., Graham, D.J. and Noland, R.B. (2009), A cointegration analysis of gasoline demand in
the United States, Applied Economics, 41, 3327--3336.
7. List of Figures and Tables




                     Figure 1. Changes in Different Energy Consumption (%)




                           Figure 2. Changes in Oil Prices and GDP (%)




                           Figure 3. Changes in Different Energy R&D (%)
                       Table 1: Descriptive Statistics.



Variables                                                 Mean Std.Dev. Obs.


Coal consum ption (m toe)                                  42.6   110.7   558
Energy use (thousands kt of oil equivalence)              198.7   455.4   558
Fossil fuels R& D (m illions 2000 US$)                    105.1   263.2   554
Fossil fuels over total energy consum ption (%)            79.5    14.8   558
Gas consum ption (tonnes)                                  49.7   122.6   523
GDP deflator                                               83.6    71.2   558
Nuclear energy consum ption (m toe)                        13.8    33.3   558
Official exchange rate (LCU per US$)                       75.8   272.8   558
Oil consum ption (tonnes)                                  88.7   188.8   558
Oil price (2000 US$)                                       46.8    23.6    33
Real effective exchange rate index                         95.9    11.8   524
Real GDP per labor (thousands 2000 US$)                    43.7    12.6   558
Renewable energy R& D (m illions 2000 US$)                 72.0   175.5   554
            Table 2: Elasticities of Renewable Energy Consumption per Labor towards Changes in Oil Prices and GDP per Labor.



                                                                                             Short Run                                    Long Run
Dependent Variables              Intercept                        Lagged                     Oil Price               GDP per              Oil Price   GDP per
(By Countries)                                                   Variable                                              Labor                           Labor
                                     (1)                              (2)                        (3)                    (4)                  (5)        (6)


20 OECD                         -3.614***         (0.620)        0.656*** (0.048) -0.024*** (0.007) 0.125***                    (0.039)    -0.070      0.363
With
Oil Reserves                    -17.852*** (4.771)               0.340*** (0.151) -0.014                     (0.018) 1.239***   (0.363)    -0.021      1.876
Australia                       -5.462***         (1.012)        0.128          (0.125) 0.046**              (0.022) -0.103     (0.086)    0.053       -0.118
Canada                          -5.032***         (1.045)        0.296*** (0.112) -0.009                     (0.013) 0.084      (0.059)    -0.013      0.119
Denm ark                        -21.488*** (5.106)               0.187          (0.134) 0.170                (0.129) 1.373***   (0.397)    0.209       1.689
Italy                           -20.723*** (2.318)               0.143          (0.092) 0.064***             (0.020) 1.260***   (0.145)    0.075       1.470
Norway                          -9.246***         (1.408)        0.210*         (0.108) -0.023*              (0.014) 0.473***   (0.084)    -0.029      0.599
United Kingdom                  -9.569***         (3.280)        0.691*** (0.086) -0.117*** (0.036) 0.684***                    (0.248)    -0.379      2.214
United States                   -2.494***         (0.812)        0.528*** (0.086) -0.026*                    (0.015) -0.063     (0.048)    -0.055      -0.133
Without
Oil Reserves                    -1.050***         (0.240)        0.895*** (0.019) -0.007                     (0.004) 0.035**    (0.016)    -0.066      0.337
Austria                         -9.318***         (2.215)        0.547*** (0.086) -0.021                     (0.019) 0.610***   (0.161)    -0.046      1.347
Belgium                         -13.577*** (3.869)               0.767*** (0.064) 0.089**                    (0.045) 1.046***   (0.322)    0.382       4.489
Ireland                         7.010**           (3.145)        0.209          (0.167) -0.055               (0.068) -1.189*** (0.366)     -0.070      -1.503
Japan                           -11.027*** (2.734)               0.292          (0.135) -0.057*              (0.032) 0.526***   (0.163)    -0.081      0.743
Netherlands                     -22.224*          (13.259) 0.726*** (0.086) -0.127                           (0.095) 1.911      (1.204)    -0.464      6.974
New Zealand                     -3.188**          (1.539)        0.593*** (0.088) -0.050*** (0.018) 0.096                       (0.126)    -0.123      0.236
Portugal                        -17.581*** (2.570)               0.174          (0.123) -0.046               (0.036) 1.186***   (0.183)    -0.056      1.436
Spain                           -19.036*** (4.420)               0.377*** (0.108) -0.123*** (0.046) 1.448***                    (0.358)    -0.197      2.324
Sweden                          -11.237*** (2.116)               0.303*** (0.117) -0.009                     (0.016) 0.687***   (0.141)    -0.013      0.986
Switzerland                     -9.917***         (2.318)        0.413*** (0.132) 0.004                      (0.015) 0.545***   (0.138)    0.007       0.928
Turkey                          -5.001***         (0.864)        0.172          (0.131) -0.061*** (0.022) -0.133*** (0.037)                -0.074      -0.161


No tes: 1 ) * , * * an d * * * d en o te sig n ifican ce at th e 1 0 %, 5 % an d 1 % lev els, resp ectiv ely .

        2 ) Th e v alu es in p aren th eses are stan d ard erro rs.
                       Table 3: Elasticities of Oil Consumption per Labor towards Changes in Oil Prices and GDP per Labor.



                                                                                           Short Run                                     Long Run
Dependent Variables              Intercept                      Lagged                     Oil Price                GDP per              Oil Price   GDP per
(By Countries)                                                 Variable                                               Labor                           Labor
                                     (1)                              (2)                       (3)                    (4)                  (5)        (6)


20 OECD                         -5.157***         (0.617) 0.739*** (0.031) -0.001                           (0.002) 0.180***   (0.023)    -0.004      0.688
With
Oil Reserves                    -2.390***         (0.448) 0.879*** (0.028) -0.003**                         (0.001) 0.084***   (0.017)    -0.022      0.701
Australia                       -3.778***         (0.880) 0.660*** (0.077) -0.013                           (0.012) -0.037     (0.047)    -0.038      -0.109
Canada                          -2.812***         (0.888) 0.926*** (0.077) 0.004                            (0.018) 0.179*     (0.097)    0.054       2.419
Denm ark                        -2.220***         (0.655) 0.830*** (0.056) -0.009                           (0.017) 0.012      (0.060)    -0.053      0.071
Italy                           -1.631**          (0.821) 0.739*** (0.075) -0.038*** (0.009) -0.113*** (0.041)                            -0.146      -0.433
Norway                          -5.368***         (1.211) 0.380*** (0.132) -0.016                           (0.016) -0.204**   (0.086)    -0.026      -0.329
United Kingdom                  -4.126***         (1.113) 0.582*** (0.102) -0.033**                         (0.015) -0.106*    (0.056)    -0.079      -0.254
United States                   -1.464***         (0.540) 0.894*** (0.049) -0.037*** (0.009) 0.028                             (0.030)    -0.349      0.264
Without
Oil Reserves                    -5.822***         (0.789) 0.706*** (0.039) 0.003                            (0.003) 0.200***   (0.029)    0.010       0.681
Austria                         -5.406***         (1.683) 0.589*** (0.113) -0.009                           (0.019) 0.024      (0.076)    -0.022      0.058
Belgium                         -7.733***         (1.885) 0.647*** (0.081) -0.038*                          (0.020) 0.354***   (0.097)    -0.108      1.003
Ireland                         -3.049            (1.883) 0.850*** (0.077) -0.047                           (0.031) 0.126      (0.124)    -0.313      0.840
Japan                           -2.093**          (0.887) 0.791*** (0.079) -0.030*** (0.010) -0.025                            (0.031)    -0.144      -0.120
Netherlands                     -9.162***         (1.926) 0.768*** (0.069) -0.010                           (0.017) 0.597***   (0.166)    -0.043      2.573
New Zealand                     -9.852***         (1.773) 0.602*** (0.079) 0.005                            (0.017) 0.472***   (0.120)    0.013       1.186
Portugal                        -17.454*** (2.551) 0.115                      (0.111) -0.041*               (0.023) 0.638***   (0.121)    -0.046      0.721
Spain                           -0.917            (1.679) 0.876*** (0.083) -0.028**                         (0.013) -0.037     (0.073)    -0.226      -0.298
Sweden                          -1.288*           (0.670) 0.733*** (0.073) -0.019                           (0.017) -0.183**   (0.090)    -0.071      -0.685
Switzerland                     -3.150**          (1.571) -0.088              (0.155) -0.022                (0.019) -0.962*** (0.181)     -0.020      -0.884
Turkey                          -17.574*** (1.583) 0.057                      (0.086) -0.151*** (0.027) 0.530***               (0.058)    -0.160      0.562


No tes: 1 ) * , * * an d * * * d en o te sig n ifican ce at th e 1 0 %, 5 % an d 1 % lev els, resp ectiv ely .

        2 ) Th e v alu es in p aren th eses are stan d ard erro rs.
                      Table 4: Elasticities of Coal Consumption per Labor towards Changes in Oil Prices and GDP per Labor.



                                                                                             Short Run                                    Long Run
Dependent Variables              Intercept                        Lagged                     Oil Price               GDP per              Oil Price   GDP per
(By Countries)                                                   Variable                                              Labor                          Worker
                                     (1)                              (2)                        (3)                    (4)                  (5)        (6)


20 OECD                         -2.613***         (0.564)        0.808*** (0.032) -0.008                     (0.005) -0.001     (0.025)    -0.041      -0.005
With
Oil Reserves                    0.079             (0.525)        0.891*** (0.029) -0.019*** (0.007) -0.136**                    (0.054)    -0.173      -1.239
Australia                       -14.379*** (2.751)               0.392*** (0.103) -0.038                     (0.030) 0.664***   (0.159)    -0.063      1.092
Canada                          -11.974*** (2.117)               0.265**        (0.124) 0.041                (0.036) 0.203      (0.167)    0.056       0.276
Denm ark                        -4.569**          (2.225)        0.242**        (0.120) -0.082               (0.067) -0.470**   (0.192)    -0.108      -0.620
Italy                           -10.988*** (2.183)               0.500*** (0.090) 0.098***                   (0.028) 0.255**    (0.105)    0.196       0.510
Norway                          -14.169*** (3.716)               0.210*         (0.122) -0.198*** (0.072) 0.290                 (0.261)    -0.251      0.367
United Kingdom                  2.647***          (1.006)        0.468*** (0.086) 0.064***                   (0.024) -0.934*** (0.175)     0.120       -1.756
United States                   -10.884*** (2.015)               0.231*         (0.139) -0.011               (0.011) 0.120***   (0.040)    -0.014      0.156
Without
Oil Reserves                    -2.898***         (0.628)        0.765*** (0.038) 0.026***                   (0.007) -0.054*    (0.028)    0.110       -0.229
Austria                         -4.794***         (1.474)        0.443*** (0.101) 0.083***                   (0.027) -0.328**   (0.138)    0.149       -0.589
Belgium                         2.324             (1.437)        0.417*** (0.115) -0.038                     (0.033) -0.905*** (0.203)     -0.065      -1.552
Ireland                         0.125             (2.311)        0.755*** (0.077) -0.051                     (0.057) -0.320*    (0.183)    -0.208      -1.306
Japan                           -11.906*** (1.469)               0.537*** (0.065) 0.070***                   (0.010) 0.455***   (0.055)    0.151       0.983
Netherlands                     -1.622            (3.738)        0.706*** (0.082) 0.022                      (0.037) -0.233     (0.324)    0.075       -0.793
New Zealand                     -10.492*** (3.821)               0.281**        (0.128) 0.122**              (0.054) -0.012     (0.316)    0.170       -0.017
Portugal                        -4.817            (4.269)        0.767*** (0.098) -0.181**                   (0.078) 0.302      (0.330)    -0.777      1.296
Spain                           -5.681**          (2.567)        0.494*** (0.095) 0.046                      (0.037) -0.155     (0.199)    0.091       -0.306
Sweden                          -8.403***         (2.346)        0.404*** (0.115) -0.017                     (0.043) -0.015     (0.138)    -0.029      -0.025
Switzerland                     25.516**          (11.140) 0.466*** (0.130) 0.131                            (0.097) -3.208*** (1.178)     0.245       -6.007
Turkey                          -9.358***         (2.033)        0.626*** (0.080) -0.056                     (0.039) 0.453***   (0.110)    -0.150      1.211


No tes: 1 ) * , * * an d * * * d en o te sig n ifican ce at th e 1 0 %, 5 % an d 1 % lev els, resp ectiv ely .

        2 ) Th e v alu es in p aren th eses are stan d ard erro rs.
                      Table 5: Elasticities of Gas Consumption per Labor towards Changes in Oil Prices and GDP per Labor.



                                                                                             Short Run                                    Long Run
Dependent Variables              Intercept                        Lagged                     Oil Price               GDP per              Oil Price GDP per
(By Countries)                                                   Variable                                              Labor                         Labor
                                     (1)                              (2)                        (3)                    (4)                 (5)       (6)


20 OECD                         -8.476***         (1.327)        0.675*** (0.041) -0.042*** (0.009) 0.405***                    (0.080)    -0.130    1.244
With
Oil Reserves                    -12.700*** (3.044)               0.650*** (0.069) -0.034*** (0.012) 0.772***                    (0.211)    -0.096    2.205
Australia                       -10.805*** (1.715)               0.512*** (0.072) -0.000                     (0.015) 0.412***   (0.083)    0.001     0.844
Canada                          -18.279*** (2.706)               0.159          (0.119) 0.010                (0.021) 0.748***   (0.137)    0.012     0.889
Denm ark                        12.034            (8.244)        1.095*** (0.085) 0.285*                     (0.169) -1.144     (0.729)    -3.000    12.042
Italy                           -14.169*** (2.852)               0.614*** (0.071) -0.033**                   (0.013) 0.880***   (0.178)    -0.085    2.280
Norway                          -35.639*** (4.288)               0.358*** (0.058) -0.113*** (0.032) 2.523***                    (0.323)    -0.176    3.930
United Kingdom                  -8.989***         (2.851)        0.677*** (0.094) -0.010                     (0.019) 0.454***   (0.158)    -0.031    1.406
United States                   -3.778***         (0.956)        0.691*** (0.080) 0.009                      (0.014) -0.009     (0.050)    0.029     -0.029
Without
Oil Reserves                    -5.998***         (1.133)        0.736*** (0.037) -0.035*** (0.010) 0.242***                    (0.068)    -0.133    0.917
Austria                         -14.392*** (2.262)               0.420*** (0.087) -0.028*                    (0.016) 0.642***   (0.114)    -0.048    1.107
Belgium                         -10.778*** (2.394)               0.574*** (0.091) 0.003                      (0.024) 0.492***   (0.122)    0.007     1.155
Ireland                         -19.271*** (2.093)               0.354*** (0.042) 0.049                      (0.035) 1.004***   (0.165)    0.076     1.554
Japan                           -15.284*** (2.267)               0.488*** (0.066) -0.018                     (0.013) 0.737***   (0.122)    -0.035    1.439
Netherlands                     -0.548            (1.946)        0.673*** (0.081) 0.024                      (0.018) -0.333     (0.209)    0.073     -1.018
New Zealand                     -4.275            (5.286)        0.806*** (0.110) -0.041                     (0.079) 0.187      (0.443)    -0.211    0.964
Portugal                        34.438***         (11.068) 0.486*** (0.053) 0.174                            (0.167) -4.236*** (1.129)     0.339     -8.241
Spain                           -18.915**         (8.023)        0.786*** (0.079) -0.029                     (0.036) 1.530**    (0.642)    -0.136    7.150
Sweden                          -12.856*** (3.169)               0.545*** (0.049) -0.103**                   (0.048) 0.585**    (0.250)    -0.226    1.286
Switzerland                     -2.453            (3.289)        0.862*** (0.072) -0.008                     (0.014) 0.046      (0.213)    -0.058    0.333
Turkey                          -30.701*** (5.106)               0.532*** (0.059) -1.071*** (0.162) 2.746***                    (0.472)    -2.288    5.868


No tes: 1 ) * , * * an d * * * d en o te sig n ifican ce at th e 1 0 %, 5 % an d 1 % lev els, resp ectiv ely .

        2 ) Th e v alu es in p aren th eses are stan d ard erro rs.
        Table 6: Elasticities of Accumulated Renewable Energy R&D per Labor towards Changes in Oil Prices and GDP per Labor.



                                                                                           Short Run                                   Long Run
Dependent Variables              Intercept                      Lagged                     Oil Price              GDP per              Oil Price GDP per
(By Countries)                                                 Variable                                             Labor                         Labor
                                     (1)                              (2)                      (3)                   (4)                 (5)       (6)


20 OECD                         -1.828***         (0.560) 0.850*** (0.028) 0.010**                        (0.004) 0.211***   (0.060)    0.067     1.407
With
Oil Reserves                    2.013***          (0.684) 0.789*** (0.035) 0.016*** (0.005) -0.133**                         (0.067)    0.078     -0.632
Australia                       -1.533            (1.800) 0.908*** (0.077) 0.061*                         (0.033) 0.146      (0.159)    0.663     1.587
Canada                          17.780***         (1.274) 0.684*** (0.018) 0.050**                        (0.024) -1.611*** (0.115)     0.158     -5.098
Denm ark                        -10.178*** (1.897) 0.505*** (0.057) -0.010                                (0.033) 1.155***   (0.193)    -0.020    2.333
Italy                           -0.350            (1.868) 0.653*** (0.029) -0.042                         (0.036) 0.172      (0.164)    -0.121    0.496
Norway                          -0.315            (2.102) 0.489*** (0.023) -0.037                         (0.041) 0.207      (0.190)    -0.072    0.405
United Kingdom                  2.258             (1.402) 0.694*** (0.034) 0.155*** (0.040) -0.193                           (0.129)    0.507     -0.631
United States                   12.342***         (1.193) 0.584*** (0.036) 0.168*** (0.023) -1.059*** (0.102)                           0.404     -2.546
Without
Oil Reserves                    -1.049**          (0.529) 0.921*** (0.024) 0.007                          (0.005) 0.120**    (0.056)    0.086     1.516
Austria                         -4.172***         (1.340) 0.560*** (0.057) 0.094*** (0.023) 0.463***                         (0.128)    0.214     1.052
Belgium                         5.758***          (1.989) 0.809*** (0.034) 0.185*** (0.043) -0.608*** (0.171)                           0.969     -3.183
Ireland                         9.258***          (1.834) 0.757*** (0.028) 0.207*** (0.043) -0.894*** (0.169)                           0.852     -3.679
Japan                           -0.871            (0.718) 0.790*** (0.032) 0.088*** (0.017) 0.070                            (0.064)    0.419     0.333
Netherlands                     -8.195***         (2.215) 0.692*** (0.030) 0.043**                        (0.018) 0.861***   (0.209)    0.140     2.795
New Zealand                     10.820***         (1.887) 0.795*** (0.030) 0.156*** (0.020) -1.079*** (0.182)                           0.761     -5.263
Portugal                        7.536***          (2.438) 0.773*** (0.075) -0.024                         (0.069) -0.699*** (0.197)     -0.106    -3.079
Spain                           5.126***          (1.963) 0.819*** (0.032) 0.110*** (0.032) -0.526*** (0.175)                           0.608     -2.906
Sweden                          7.162***          (0.623) 0.650*** (0.018) 0.114*** (0.017) -0.596*** (0.055)                           0.326     -1.703
Switzerland                     4.274**           (1.877) 0.960*** (0.042) -0.032**                       (0.016) -0.362*    (0.188)    -0.800    -9.050
Turkey                          -7.223**          (3.261) 0.395*** (0.122) -0.103                         (0.148) 0.712**    (0.350)    -0.170    1.177


No tes: 1 ) * , * * an d * * * d en o te sig n ifican ce at th e 1 0 %, 5 % an d 1 % lev els, resp ectiv ely .

        2 ) Th e v alu es in p aren th eses are stan d ard erro rs.
             Table 7: Elasticities of Accumulated Fossil Fuel R&D per Labor towards Changes in Oil Prices and GDP per Labor.



                                                                                          Short Run                                    Long Run
Dependent Variables              Intercept                     Lagged                     Oil Price                GDP per             Oil Price GDP per
(By Countries)                                                Variable                                              Labor                         Labor
                                     (1)                          (2)                         (3)                    (4)                 (5)        (6)


20 OECD                            -0.661        (0.528) 0.932*** (0.021)                  -0.001        (0.008)    0.081    (0.057)    -0.015    1.199
With
Oil Reserves                       1.290         (1.081) 0.909*** (0.027)                  -0.015        (0.015)    -0.084   (0.107)    -0.168    -0.921
Australia                       2.191***         (0.798) 0.829*** (0.032) -0.025                         (0.018) -0.130      (0.084)    -0.146    -0.760
Canada                          9.277***         (1.234) 0.955*** (0.029) -0.034                         (0.026) -0.849*** (0.109)      -0.756    -18.867
Denm ark                        -9.873           (6.102) 0.609*** (0.085) -0.120                         (0.139) 1.079*      (0.573)    -0.307    2.760
Italy                           -16.297*         (8.548) 0.715*** (0.078) 0.232                          (0.169) 1.294*      (0.717)    0.814     4.540
Norway                          -6.620***        (0.996) 0.456*** (0.031) 0.027                          (0.018) 0.838***    (0.100)    0.050     1.540
United Kingdom                  10.786*** (1.230) 0.805*** (0.026) 0.035*** (0.013) -0.987*** (0.109)                                   0.179     -5.062
United States                   11.274           (1.426) 0.625*** (0.050) 0.064*** (0.019) -0.924*** (0.115)                            0.171     -2.464
Without
Oil Reserves                       -0.013        (0.434) 0.968*** (0.018)                  0.009*        (0.005)    0.005    (0.046)    0.287     0.156
Austria                         7.897***         (1.845) 0.755*** (0.054) 0.067**                        (0.034) -0.746*** (0.162)      0.273     -3.045
Belgium                         3.293*           (1.787) 0.978*** (0.031) 0.086*** (0.026) -0.361**                          (0.151)    3.909     -16.409
Ireland                         11.885*** (3.813) 0.785*** (0.080) 0.061                                 (0.042) -1.129*** (0.356)      0.284     -5.251
Japan                           0.928            (1.669) 0.876*** (0.043) 0.154*** (0.045) -0.151                            (0.150)    1.242     -1.218
Netherlands                     10.309*** (3.810) 0.822*** (0.029) 0.172*** (0.029) -0.968*** (0.353)                                   0.966     -5.438
New Zealand                     6.752***         (2.132) 0.883*** (0.028) 0.191*** (0.021) -0.712*** (0.205)                            1.632     -6.085
Portugal                        5.238**          (2.416) 0.988*** (0.056) 0.029                          (0.086) -0.544**    (0.234)    2.417     -45.333
Spain                           6.006**          (2.576) 0.930*** (0.031) 0.115*** (0.027) -0.654*** (0.229)                            1.643     -9.343
Sweden                          13.535*** (2.777) 0.871*** (0.042) 0.080                                 (0.063) -1.285*** (0.239)      0.620     -9.961
Switzerland                     2.137            (4.411) 0.913*** (0.043) -0.032                         (0.039) -0.156      (0.420)    -0.368    -1.793
Turkey                          0.174            (2.031) 0.485*** (0.104) -0.213                         (0.141) 0.009       (0.229)    -0.414    0.017


No tes: 1 ) * , * * an d * * * d en o te sig n ifican ce at th e 1 0 %, 5 % an d 1 % lev els, resp ectiv ely .

        2 ) Th e v alu es in p aren th eses are stan d ard erro rs.

								
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