Abstract
In this paper, we explore the long-run co-integration relationship between output per worker, capital per worker and energy per worker for 12 countries in the Balkan Peninsula (Albania, Austria, Bulgaria, Cyprus, Greece, Hungary, Italy, Macedonia, Romania, Slovakia, Slovenia and Turkey) which are part of the Energy Community. In line with the current developments in energy economics [62], we add to the literature by reviewing the elasticity coefficients for the 12 countries using the augmented Solow [63] framework and the ARDL bounds procedure [57]. The causality nexus is explored using the Toda and Yamamoto (1995) procedure. The results show that output, capital and energy (in per worker terms) are co-integrated. We note that all countries have positive and statistically significant long-run energy elasticity coefficients. Except for Macedonia, we note that energy is statistically significant in the short-run for all other countries. The causality results support the conservation hypothesis for 7 countries (Albania, Bulgaria, Cyprus, Hungary, Italy, Romania and Turkey); the growth hypothesis for 2 countries (Austria and Macedonia); and the feedback hypothesis for 3 countries (Greece, Slovakia and Slovenia), respectively.