intensity change across 100 countries from 1980 to 2010 into five components: technological catch‐ up, technological progress and changes in the capital‐energy ratio, labor‐energy ratio and output structure. Technological progress, capital accumulation and changes in output structure contributed positively to lowering energy intensity while a decrease in the labor‐energy ratio increased intensities.

As this brief survey shows, the existing EKC and convergence literature does not present conclusive evidence on the relationship between energy intensity and economic growth. In this paper we therefore revisit this question using a large data set of 137 economies over the period of 1990‐2014. In our main estimation model, we adopt a novel piece‐wise regression method which imposes less structure on the relationship between the level of economic growth and energy intensity. We find a negative correlation between GDP per capita and energy intensity across the entire sample and study period. However, the downward slope flattens out at higher values of GDP. The inflection point is at a per capita income level of around $5,000. We also find evidence of cross‐country convergence in energy intensity. Finally, based on index decomposition, we investigate the extent to which shifts in economy‐wide energy intensity are affected by structural vs. efficiency changes at the country level. The analysis shows that while structural change is important for intensity levels in all countries, the efficiency effect is more important for higher‐income countries. This finding supports the income threshold effect identified earlier: the relatively automatic efficiency gains (as a result of income gains) are at lower levels of GDP (and thus the steeper slope), while the harder problem (improving efficiency) is more important in higher income countries. The results suggest that when countries move beyond lower‐middle income levels, energy efficiency policies become far more important if they want to continue the rate of improvement in energy efficiency.

# **II. Data**

Energy consumption data are obtained from the International Energy Agency (IEA) World Energy Statistics and Balances data set. We calculate aggregate energy intensity as total final energy consumption divided by total GDP (GDP per capita times population). Sector‐level energy intensity is defined as energy consumption of agriculture, industry and services divided by sector value added.

Data on GDP and value added in agriculture, services, and industry and manufacturing sectors are from the World Bank World Development Indicators (WDI).<sup>2</sup> For comparison across countries and over time, all values are converted into PPP‐based constant 2005 prices.

We also control for other country characteristics, including exports and imports, age structure of the population, and population density. All these factors may lead countries to converge to different steady‐state levels of energy intensity. Data on these variables are also obtained from WDI.

Overall, we have an unbalanced panel of 137 economies from 1970 to 2014, and a balanced panel of 64 countries during the same period. Since the attrition rate is relatively high, it may be difficult to tell whether a change over time is picking up a real development or just a change in the composition of the sample. However, eliminating countries with missing data could cause sample selection bias, if countries with missing data are systematically different from those that have complete observations over the study period. In the following we report results from the unbalanced panel. For robustness

> 2 Last Updated: 05/26/2017.

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