Heterogeneous energy-GDP nexus in transition economies: MG/PMG and ARDL-ECM evidence

The energy-GDP nexus in transition economies remains poorly understood, with homogeneous panel estimates frequently masking cross-country heterogeneity and generating one-size-fits-all policy recommendations. This study investigates the long-run drivers of energy consumption in 15 transition economies over 2005–2024, focusing on GDP growth, inflation, trade openness, logistics performance, and industrial activity. This study employs a multi-method approach combining the MG/PMG panel estimators with country-specific ARDL-ECM tests, and a common cointegration rule, based on ARDL bounds tests and ECM convergence criteria, to categorize economies into stable, partial, and inconclusive equilibrium subgroups. The MG estimator performs better in capturing the true cross-country variation, estimating a 0.71% increase in energy use per 1% GDP growth, and capturing long-run logistics efficiency improvements (β = −0.384) that are masked by PMG's short-run activity bias. Six economies exhibit full cointegration, seven show partial cointegration, and two yield inconclusive results. The results highlight the importance of country-specific energy strategies.