Abstract

This study analyses the relationship between energy consumption and economic growth, using annual panel data from 16 Latin American countries over the period 1971–2001. We use a random coefficient (RC) method to control for both finite sample and sample-heterogeneity biases. Our results show (1) a long-run relationship between real GDP, energy consumption, labour force and real capital stock and (2) a long-run unidirectional causality running from energy to economic growth. These results support the energy-driven growth hypothesis.