Does energy price affect energy efficiency? Cross-country panel evidence

In this paper, we analyze the relationship between energy intensity and energy price in a panel of 120 countriesover 34 years, from 1980 to 2013. We use information on energy intensity and real oil price, and merge it withmacroeconomic data on the countries' structural characteristics. We assess their long-run relationship and di-rection of causality using panel cointegration tests and dynamic panel data models. We identify a statisticallysignificant, but weak negative effect of real oil price on energy intensity, which corresponds to a positive effect ofenergy price on energy efficiency. We also show significant, large regional differences in this relationship. Wethus posit that a global policy aimed at increasing the price of oil would induce a limited increase in averageenergy efficiency through a more efficient use of energy, but this increase would differ considerably acrossregions around the world