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Abstract(s)
tGross Domestic Product (GDP) is the indicator commonly used to measure economic growth and sus-tainable development. However, this indicator can be very inefficient for evaluating development. Themost prominent alternative indicator is the Index of Sustainable Economic Welfare (ISEW). Indeed, thisindex can be used to control for the way that countries use available resources, balancing ecologicaldevelopment, damages caused to the environment and income distribution between citizens. This papercompares a sustainable development approach, using the ISEW, with the traditional economic growthapproach using GDP, and its relationship with energy consumption. The traditional hypotheses of theenergy-growth nexus are tested through Panel-Corrected Standard Errors estimators, for a panel consti-tuted by twenty European countries, with an annual data frequency for the time span 1995–2014. Theresults indicate a new negative feedback hypothesis for the alternative measure of development anda conservative hypothesis for economic growth with energy consumption. This study also finds vari-ous other effects on sustainable development by economic growth factors, such as Terms-of-trade andRents from natural resources. These findings indicate that the economic growth approach, widely stud-ied using GDP, has been wrongly interpreted by policy makers trying to achieve increased sustainabledevelopment.
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Keywords
Sustainable Development Economic growth PCSE ISEW Europe