1. The Relation of Energy to the Macroeconomy

2. The composition of our energy has changed over the years, but fossil fuels remain easily 80% of our source for per capita energy consumption.

3. Sample of 36 Countries Energy per cap and PPP GDP per cap
Algeria
India
Poland
Australia
Indonesia
Portugal
Belgium
Italy
Romania
Brazil
Japan
Saudi Arabia
Canada
Kazakhstan
South Africa
Chile
Korea
Spain
China
Malaysia
Sweden
Colombia
Mexico
Thailand
Czech
Netherlands
Turkey
Egypt NZ
UAE
France
Nigeria UK
Germany
Norway
USA

9. These results indicate that countries that use more energy relative to GDP have made technical transitions to greater conservation – i.e. the poor cannot afford to be conservative in resource usage

11. Oil Prices and Inflation – A Very Simple Simulation Study
by the St. Louis Fed
Three Scenarios

12. Elasticity = 0.46

14. What about the evidence that CO2 emissions are being driven by economic activities?

15. Tests on the Full Sample indicate there is no stable long run relation and no short run relation

16. Cointegration Tests on Reduced Sample 1990-2009
Step 1: testing for a unit root in l_CO2
Augmented Dickey-Fuller test for l_CO2
including one lag of (1-L)l_CO2
sample size 18
unit-root null hypothesis: a = 1
test with constant
model: (1-L)y = b0 + (a-1)*y(-1) e
estimated value of (a - 1):
test statistic: tau_c(1) =
asymptotic p-value
1st-order autocorrelation coeff. for e:
Step 2: testing for a unit root in l_WorldGDP
Augmented Dickey-Fuller test for l_WorldGDP
including one lag of (1-L)l_WorldGDP
sample size 18
unit-root null hypothesis: a = 1
test with constant
model: (1-L)y = b0 + (a-1)*y(-1) e
estimated value of (a - 1):
test statistic: tau_c(1) =
asymptotic p-value
1st-order autocorrelation coeff. for e: 0.150

17. Cointegration Exists between CO2 and Real World PPP GDP
Step 3: cointegrating regression
Cointegrating regression -
OLS, using observations (T = 20)
Dependent variable: l_CO2
coefficient std. error t-ratio p-value
const e-014 ***
l_WorldGDP e-022 ***
Mean dependent var S.D. dependent var
Sum squared resid S.E. of regression
R-squared Adjusted R-squared
Log-likelihood Akaike criterion
Schwarz criterion Hannan-Quinn
rho Durbin-Watson
Step 4: testing for a unit root in uhat
Augmented Dickey-Fuller test for uhat
including one lag of (1-L)uhat
sample size 18
unit-root null hypothesis: a = 1
model: (1-L)y = (a-1)*y(-1) e
estimated value of (a - 1):
test statistic: tau_c(2) =
asymptotic p-value
1st-order autocorrelation coeff. for e: 0.057
Cointegration Exists between CO2 and Real World PPP GDP

18. No Strong Evidence for Error Correction
Model 3: OLS, using observations (T = 19)
Dependent variable: d_l_CO2
coefficient std. error t-ratio p-value
const ***
d_l_WorldGDP
uhat2_
Mean dependent var S.D. dependent var
Sum squared resid S.E. of regression
R-squared Adjusted R-squared
F(2, 16) P-value(F)
Log-likelihood Akaike criterion
Schwarz criterion Hannan-Quinn
rho Durbin-Watson
No Strong Evidence for Error Correction

19. The Small Amount of Available Data Does NOT Show CO2 is Caused by GDP Growth -- Only Episodic Evidence -- Not Statistical Evidence.

20. corr (d_l_WorldGDP, d_l_CO2) = 0.23791670
Under the null hypothesis of no correlation: t(23) = , with two-tailed p-value which shows that we cannot reject the null

21. Rising atmospheric concentrations of CO2 appear to be caused by something else – not mainly GDP growth – probably at best 25% of CO2 growth is caused by rising GDP