Final Energy Consumption—Growth Nexus in Romania Versus the European Union: A Sectoral Approach Using Neural Network

Abstract

The energy crisis caused first by the COVID-19 pandemic and continued by the Russo-Ukrainian War has demonstrated that energy is a determining factor in the conduct of activities of any state. Several studies have examined the relationship between energy consumption and economic growth, developing various theories, but there is no consensus. This study investigates relationships by analyzing several regression models and choosing the fittest. Then, the verification of its validity is performed through the neural network, which gives greater credibility to the results obtained. Furthermore, using a structural analysis, the investigation is expanded to ranking the impact of sector-specific energy consumption on economic growth. The research includes data from 1995 to 2020 for the European Union (EU) and Romania. The results indicate that short-term energy consumption can have a positive or negative impact on economic growth, both in the EU and Romania. The structural analysis highlights the direct and indirect effects, with different intensities, of sector-specific energy consumption on economic growth. This study is interested primarily in the conditions of uncertainty caused by the COVID-19 pandemic and the Russo-Ukrainian War, to enable the EU and each member state to take effective energy policy measures to ensure their energy security.

Keywords

• energy consumption
• economic growth
• COVID-19
• neural network
• curve estimation regression
• sector consumption energy