Effects of Energy Consumption on Value added of Various Sectors of Iranian Economy
Document Type : Research Paper
Abstract
In this paper, the effect of energy consumption on non-oil economic growth has been investigated on three economic sectors of Iran (agriculture, industry and services) from 1991 to 2010. Basic model of study has been selected according to the augmented fluctuation of neoclassical economic growth framwork. Empirical analysis has been achieved on the basis of panel unit root tests, cointegration panel tests and estimation of panel long-run cointegration relations with FMOLS and DOLS. The results show that there is a long-run cointegration relationship between energy consumption and non-oil GDP. Elasticity of non-oil GDP to energy consumption, physical gross capital and employed manpower is according to the theories and previous empirical studies. Comparison of this elasticity with both estimators of cointegration panel long-run relations shows that results are very close to each other. Also by using estimation of fixed effects model, elasticity of non-oil GDP to energy consumption in agricultural, industry and services sectors are 0.34, 1.15 and 0.39, respectively.
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