Energy Consumption Effects on an Economy with Structural Breaks: Evidence from Portugal (1965-2008).

The paper examines the nexus between growth and primary energy consumption in Portugal, using the Autoregressive Distributed Lag (ARDL) bounds test approach with annual time series data from 1965 to 2008. Portugal is a medium-sized economy which has experienced several episodes of economic expansion and stagnation that make it of particular interest. Portugal is constrained by external energy dependency and is faced with the policies of energy preservation due to international commitments and initiatives, such as the Kyoto Protocol and Directives of European Union, that potentially may have deep implications for its economic growth. Empirical results suggest that energy causes growth in the long run and short run, but growth only causes energy consumption in the short run. Therefore, an energy policy to promote consumption constraints on energy will reduce GDP growth in Portugal. [ABSTRACT FROM AUTHOR]