Rethinking the energy-growth nexus: Proposing an index of sustainable economic welfare for Sub-Saharan Africa

The current paper calculates an Index of Sustainable Economic Welfare Growth (ISEW) for 42 Sub- Saharan African (SSA) countries for the years 1985-2013. Then it uses the calculated indicator as a proxy for sustainable income in place of GDP to re-estimate the energy-ISEW nexus. Besides energy consumption, additional independent variables are: capital, CO2 emissions, rents, trade and inflation. Perusing panel data cointegration analysis and Granger causality, results are compared with the ones from the conventional energy-GDP growth nexus and we find evidence of the feedback hypothesis when the ISEW is used in place of GDP. When the GDP is used as an indicator of income, the neutrality hypothesis is evidenced instead.