State-Dependent Heterogeneity in the Energy–Growth Elasticity: The Role of Emissions Intensity

This paper examines whether the output elasticity of energy varies across emissions states and whether aggregate emissions or emissions intensity provides the more informative conditioning variable. A fixed-effects panel threshold model is estimated for 110 countries over 2006–2022. Logged total greenhouse-gas emissions are first used to select regimes endogenously. Under this benchmark specification, energy raises output in both regimes, and the point elasticity is larger in the high-emissions state, but the cross-regime difference is not statistically distinct under inference robust to cross-sectional dependence, while bootstrap evidence provides only limited support for a global threshold based on aggregate emissions. The empirical picture is sharper when emissions intensity is used as the conditioning state. In that case, the energy–output elasticity is lower in high-intensity regimes, and the contrast becomes more visible in interaction-based specifications and after 2015. Source decomposition shows that both renewable and non-renewable energy are less productive in high-intensity regimes, with the attenuation especially clear for non-renewables and with renewables turning negative in the high-intensity state. Overall, aggregate emissions mainly sort countries by scale, whereas emissions intensity more clearly captures economically meaningful heterogeneity in the productivity of energy.