Iranian Journal of Economic Research

Energy Consumption and Economic Growth: a Nonlinear Approach

Authors

Firooz Falahi 1
jalal montazeri shoorekchali 2

1 Ph.D, Assistant Professor, Economics Department, University of Tabriz

2 MA student at Economics Department, University of Tabriz, Iran

Abstract
The annual data on economic growth and energy consumption in Iran during the period 1352-1386 is used to study the effect of energy use on the growth of Iranian economy. To that end, a smooth transition regression model is used. The selected model has two regimes and two thresholds. Regime one starts from 1353 and ends in 1362; while the second regime covers the period 1363-1386. The results show that the energy use had a negative effect on the economic growth in both regimes, and that the effect is larger in the first regime. Therefore, based on these results the growth hypothesis does not hold in the Iranian economy. This could be considered as a sign of inefficient use of energy in Iran.

Keywords

energy
Economic Growth
Iran
Nonlinear models
Regime Change

  • Receive Date 27 April 2016
  • First Publish Date 27 April 2016

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