The effect of government expenditure on energy intensity: a panel smooth transition regression (PSTR) approach

Energy is considered a significant factor for sustainable development, and governments are faced some challenges such as the expenses involved in running the economy and how to perform such costs for reducing the energy intensity and provide energy efficiency. This article investigates government expenditure impact on the energy intensity on top ten European crude oil-exporting countries during 1995-2014. The results confirm the non-linear effect of government expenditure per GDP on the energy intensity with one threshold parameter. Findings indicate that government expenditure impact per GDP on energy intensity is significantly negative at low government expenditure (at first regime) and positive at the high government expenditure (at second regime). The positive and increasing effect of government expenditure on the energy sector in the second regime shows that the government intervention at macro-programs and the high government size can hike up energy intensity.