Spectral analysis of the relationship between energy consumption, employment, and business cycles

Through the use of cross-spectral techniques, we identify the dependence of U.S. industrial energy consumption on the industrial production index and total non-farm employment over business cycles. In particular, total energy consumption, mainly due to its industrial component, responds to changes in the production index. It is found that the industrial demand for energy is fairly sensitive to business cycles, while the household energy consumption and transportationsector energy consumption are not significantly affected by the expansion and contraction phases of the economy. In addition, there is a significant degree of correlation between the total non-farm employment and energy consumption over the business cycle frequencies. The evidence indicates a simultaneous response of employment and energy consumption to business cycle movements of the production index and suggests neutrality between energy and labor employment. © 1990

Free trade zones, tariffs and the real exchange rate

This article examines the consequences of changes in final and intermediate good tariffs on structural adjustment, urban unemployment, and the real exchange rate in the presence of a free trade zone (FTZ) and foreign capital in the host country. The location of the FTZ and the disaggregation of the economy allows us to examine the consequences of a tariff change on regional incomes. It is shown that as a consequence of a tariff change the urban and rural incomes need not necessarily move in the same direction (hence the potential for rural and urban conflict in policy making). It is also shown that an increase in the tariff on an immediate good may result in both export promotion and an increase in welfare. Such expansion is a nonconventional result, since raising barriers to trade normally leads to a contradiction in the volume of the trade. The interconnection between the real exchange rate and intermediate good tariff is also explored in this article. It is shown that a policy of imposing tariffs on these goods may result in the appreciation of the real exchange rate. Copyright Kluwer Academic Publishers 1996free trade zone, regional income, tariffs, non-traded goods, real exchange rate, unemployment, F10, F21, O10,

Energy-GDP relationship for oil-exporting countries: Iran, Kuwait and Saudi Arabia

The purpose of this paper is to examine the causality issue between energy consumption and economic growth for three typical oil-exporting countries: Iran, Kuwait and Saudi Arabia. We use two different test methods to test for causality, namely, the error correction model and Toda-Yamamoto (1995) procedure. The results based on both approaches consistently show a unidirectional long-run causality from economic growth to energy consumption for Iran and Kuwait and unidirectional strong causality from energy consumption to economic growth for Saudi Arabia. So, the results support the neutrality hypothesis of energy consumption with respect to economic growth for Iran and Kuwait and vice versa for Saudi Arabia. The findings have practical policy implications for decision makers in the area of macroeconomic planning, as energy conservation is a feasible policy with no damaging repercussions on economic growth for Iran and Kuwait. However, increased GDP requires enormous energy consumption in Saudi Arabia. So, it seems misleading to recommend the same policy for different oil-exporting countries. Copyright 2007 Organization of the Petroleum Exporting Countries.