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The growth of income and energy consumption in six developing countries

This paper reexamines the inter-temporal link between energy consumption and income in six developing countries with diverse economic backgrounds and energy statistics, in a production function framework. We employ the generalized variance decompositions and generalized impulse response techniques to see if the growth of income and energy consumption contains considerable information to predict each other. In all countries, energy appears as an essential factor of production. Results indicate that energy may be a relatively more important input than labor and/or capital in some countries. Hence, neutrality of energy does not seem to hold.