Energy consumption and value added growth in different sectors of Iran: Co integration and Multivariate Panel Error Correction approach

اقتصاد و توسعه منطقه ای

Article 2, Volume 22, Issue 9, December 2015, Pages 31-67   

Document Type: مقالات پژوهشی

DOI: 10.22067/erd.v22i9.30393

Authors

majid aghaei^* ; Mahdieh Rezagholizadeh

University of Mazandaran

Abstract

This paper surveys economic growth and energy consumption relationship by new econometric methods in different sectors of Iran. this study uses panel error correction model and panel co integration and causality tests to investigate short run and long run relationship between energy and value added growth in different sectors of Iran’s economy with regards to energy price in the time period of 1369 until 1389.Long run and short run coefficients estimation have done by using Dynamic Ordinary Least Square, Fully Modified Ordinary Least Square and Pooled Mean Group respectively.
Results show that increasing (decreasing) of energy consumption in different sectors of Iran’s economy cause to increase (decrease) in value added growth, so we accept Feedback hypothesis in this study because of existence of bidirectional relationship between energy consumption and economic growth in sectors of Iran economy. Energy price impact on economic growth in short run is negative but in long run is positive

Keywords

panel Error Correction Model; Panel Co integration; Energy Consumption; Economic Growth

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