ENERGY CONSUMPTION AND ECONOMIC GROWTH RELATIONSHIP: PANEL DATA ANALYSIS ON DEVELOPING COUNTRIES

Abstract

In this study, the relationships between economic growth and energy consumption for 21 developing countries, one of which is Turkey, are investigated by panel data analysis with simultaneous equation system for 1990-2014 periods. The stationarity of the series is tested by IPS method and the series are found to be stationary in the first difference. Causality relationships between variables are tested by Dumitrescu and Hurlin (2012) panel causality test and found that there is a two-way causality relationship between economic growth and energy consumption in these countries. The existence of cointegration between variables is tested by Pedroni (2004) panel cointegration test and it is determined that there is a cointegration relationship between these series. Long and short-term analyzes of the series are conducted by Panel DOLS method and it is found that 1% increase in energy consumption rises economic growth by 1.13% and 1% increase in economic growth rises per capita energy consumption by 0.45%. It is also determined in the short term analyzes that the coefficients of the error correction terms of the models are negative and statistically significant, implying that the error correction mechanism of the models are operating and that the long term analyzes are reliable