Linkages of the energy sector in the Greek economy: an input-output approach

Abstract

Purpose The purpose of this paper is to reveal the dynamics of the Greek energy sector. As energy sectors contribute substantially to a national economy and stimulate national output and employment, it is important to identify their upward and downward linkages and interrelations with the other sectors of the economy. Design/methodology/approach To do this and capture such relations in the economy, a general equilibrium model is used. In specific, input–output (I–O) analysis is used and a model is specifically built for the Greek economy to examine in detail the energy sectors. Multiplier and linkage analysis is performed to assess their dynamics in terms of output, household income and employment. Findings Results indicate that the three energy sectors’ multipliers and elasticities, though are not ranking in the first places, are enough high indicating their strong linkages in the economy and their potentials to enhance the economy’s total output, employment and household income. Research limitations/implications Further disaggregation of the economy’s energy sectors is needed to make clearer the separation among renewable and non-renewable sector, to identify and compare the dynamics and contribution of each category in the economy. Additionally, an environmental I–O model would indicate consequences on the environment and not just pure economic benefits. Practical implications Through the analysis, it can be seen that energy sectors and secondary energy products have the ability to drive a country’s economic activity through exports and intersectoral linkages, even if it is not a crude petroleum producing economy. Thus, knowledge of the economic impacts of such sectors is a valuable information. Originality/value The current study provides significant information of an economy’s energy sectors regarding their ability to support economic activity and employment. A general equilibrium model is used, examining the whole economy, to assess direct and indirect interrelationships.