Analysis of the correlation between the Gross Domestic Product and the final consumption of electricity

Abstract

Abstract While the economy has shown clear signs of recovery, in quantitative terms, after the moment of the global crisis, energy production has returned to the level before the crisis, only since 2011. In this context, this paperwork aims to carry out an analysis on the existence of a correlation between the Gross Domestic Product registered in Romania and the final annual consumption of electricity. The databases used involve the data recorded for the period 2000-2018. Over time, in the specialty literature, there have been two approaches regarding the link between the economic growth and the energy consumption, respectively an approach starts from the idea that in order for economic growth to occur, energy consumption must increase, and another promotes the idea that economic growth can reduce energy consumption, by applying energy efficiency measures. To perform the analysis, a simple linear regression model was initially used in which we considered the Gross Domestic Product as a dependent variable and the Electricity Consumption as an explanatory factor (independent variable). Subsequently, analysing the results, a quadratic linear regression model was used to test the hypothesis of a more complex link between the two indicators. Following the tests performed on the two chosen variables, the Gross Domestic Product of Romania and the Final Electricity Consumption, can be argued that the energy intensity of the economy increases as economic growth reaches a certain threshold. After that threshold, economic growth is associated with the relative decrease in energy consumption.