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Energy Consumption and Regional Economic Growth: The Case of Iranian Manufacturing Sector

Iman Cheratian () and Saleh Goltabar ()

MPRA Paper from University Library of Munich, Germany

Abstract: The relationship between energy consumption and economic growth has undergone extensive investigation and the empirical evidences are mixed ranging from bi- and uni-directional causality to no causality. These conflicts may be due to the fact that countries have different energy consumption patterns and various sources of energy. This paper is the first study on causal relationships between industrial energy consumption and real regional economic growth based on the panel data for 31 provinces in Iran over the period 2004–2014. We employ the GMM-SYS approach for the estimation of the panel vector autoregression (PVAR) model. Afterwards, by doing an in-depth analysis of energy consumption data, the purpose of this paper is to contribute to the debate by examining the causality in various forms of energy consumption (Diesel fuel, Natural Gas, Gasoline, Kerosene, LPG&LNG, Petroleum and Electricity). We discover: (a) totally, there is bidirectional causality between industrial energy consumption and regional growth; (b) regional growth leads to Gasoline consumption; (c) Natural gas consumption leads to regional growth; (d) there exists no causal relationship between regional growth and Diesel fuel, Kerosene, LPG&LNG and Petroleum consumption; (e) there is also bidirectional causality between industrial electricity consumption and regional economic growth. Taken together, the results of this study involve valuable information for policy makers at regional level.

Keywords: Energy consumption; GDP PerCapita; Manufacturing sector; Causality; Panel VAR; Iran. (search for similar items in EconPapers)
JEL-codes: C33 L60 N55 O13 Q43 R11 (search for similar items in EconPapers)
Date: 2017-04-15
New Economics Papers: this item is included in nep-ara, nep-cwa and nep-ene
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