The Threshold Effects of Globalization on Energy Intensity Convergence in the Middle East Region: A Panel Smooth Transition Analysis

MohammadHasan Tarazkar () and Maasomeh Arabollah Firozjah ()
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MohammadHasan Tarazkar: Associate Professor, Department of Agricultural Economics, School of Agriculture, Shiraz University
Maasomeh Arabollah Firozjah: Ph. D. Candidate, Department of Agricultural Economics, School of Agriculture, Shiraz University

Quarterly Journal of Applied Theories of Economics, 2024, vol. 11, issue 3, 197-226

Abstract: Given the importance of globalization and its relationship with energy intensity, this study examines the role of globalization with an emphasis on its threshold effect on energy intensity convergence in the Middle East region during 1980-2019. The Panel Smooth Transition Regression (PSTR) model was used to investigate the non-linear relationship. The simultaneous characteristics of heterogeneity, non-linearity, and cross-sectional correlation of variables were examined, considering globalization as a transmission variable. The results of the linearity test confirmed the existence of a non-linear relationship between the variables. Moreover, considering a threshold transfer function with a threshold parameter indicating a two-regime model was determined to clarify the non-linear relationship between variables of the model. Finally, threshold limits of 1.697 and 1.874 and a slope parameter or transfer rate of 226.997 were estimated. The results also indicate a lack of convergence in energy intensity among countries in the Middle East region. Therefore, it is not possible to create a single energy policy that can be implemented simultaneously for all countries in the Middle East region

Keywords: Energy Intensity Convergence; PSTR; Globalization (search for similar items in EconPapers)
JEL-codes: C23 F64 Q43 (search for similar items in EconPapers)
Date: 2024
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