Threshold Effects of Energy Consumption on Economic Growth in Turkey
Abstract
In this study, the relationship between energy consumption and economic growth, and the effect of energy intensity level on this relationship are investigated for the period 1975-2013 for Turkey using recently developed Threshold Autoregressive (TAR) Models that provide appropriate procedures for estimation and inference. Although the majority of studies in the relevant literature support the view that energy consumption may promote economic growth, the empirical findings, based on the estimation of the threshold model, reveal evidence of threshold effects related to the energy consumption in Turkey. According to the analysis results, estimated value of the threshold is 0.191 for energy intensity level. The findings indicate that an energy consumption rate above the threshold energy density level adversely affects economic growth, and a consumption rate below the threshold level positively affects economic growth. These results show that when the optimal levels of energy density, which is one of the important indicators of energy efficiency, are exceeded, energy consumption considerably hinders economic growth. In this regard, political authorities and decision-makers should not ignore threshold levels within the context of energy density while determining energy policies. This is because this condition has a fundamental role in both increasing the effectiveness of implemented economic policies and realizing sustainable economic growth which has a significant place in stability.References
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[39] Soytas, U., and Sari, R. 2003. Energy Consumption and GDP: Causality Relationship in G-7 Countries and Emerging Markets. Energy Economics. 25(1): 33–37. Available at: http://dx.doi.org/10.1016/S0140-9883(02)00009-9
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[41] Tong, H. 1978. On A Threshold Model. 29: 575-586. Sijthoff & Noordhoff.
[42] Tsay, R. S. 1989. Testing and Modeling Threshold Autoregressive Processes. Journal of the American Statistical Association, 84(405): 231-240. Available at: http://dx.doi.org/10.1080/01621459.1989. 10478760
[43] Wesseh, P. K., and Zoumara, B. 2012. Causal Independence between Energy Consumption and Economic Growth in Liberia: Evidence from a Non-Parametric Bootstrapped Causality Test. Energy Policy, 50(ss): 518–527. Available at: http://dx.doi.org/10.1016/j.enpol.2012.07.053
[44] Wolde-Rufael, Y. 2006. Electricity Consumption and Economic Growth: A Time Series Experience for 17 African Countries. Energy Policy, 34(10): 1106–1114. Available at: http://dx.doi.org/10.1016/j.enpol. 2004.10.008
[45] Yılmaz, A., and Karataş, T. 2009. A study on the Causes of Current Account Deficits After 2001 Crisis in Turkish Economy, Marmara University Journal of Economic and Administrative Sciences, 27(2): 69-96.
[46] Yu, E.S.H., and Hwang, B. K. 1984. The Relationship between Energy and GNP: Further Results, Energy Economics, 6(3): 186-190. Available at: http://dx.doi.org/10.1016/0140-9883(84)90015-X
[2] Akgül, I., and Ozdemir, S. 2012. Inflation Threshold and the Effects on Economic Growth, Iktisat Isletme ve Finans, 27(313): 85-106. Available at: http://dx.doi.org/10.3848/iif.2012.313.3153
[3] Akinlo, A. E. 2008. Energy Consumption and Economic Growth: Evidence from 11 Sub-Sahara African Countries, Energy Economics, 30(5): 2391-2400. Available at: http://dx.doi.org/10.1016/j.eneco.2008. 01.008
[4] Altinay, G., and Karagol, E. 2004. Structural Break, Unit Root, and the Causality between Energy Consumption and GDP in Turkey, Energy Economics, 26(6): 985–994. Available at: http://dx.doi.org/10.1016/j.eneco.2004.07.001
[5] Altinay, G., and Karagol, E. 2005. Electricity Consumption and Economic Growth: Evidence from Turkey. Energy Economics. 27(6): 849–856. Available at: http://dx.doi.org/10.1016/j.eneco.2005.07.002
[6] Apergis, N., and Payne, J. E. 2010. Energy Consumption and Growth in South America: Evidence from A Panel Error Correction Model, Energy Economics, 32(6): 1421–1426. Available at: http://dx.doi.org/10.1016/j.eneco.2010.04.006
[7] Asafu-Adjaye, J. 2000. The Relationship between Energy Consumption, Energy Prices and Economic Growth: Time Series Evidence from Asian Developing Countries. Energy Economics, 22(6): 615-625. Available at: http://dx.doi.org/10.1016/S0140-9883(00)00050-5
[8] Bayrak, M., and Esen, Ö. 2014. Turkey’s Problem of Energy Deficit and Recommendations for Its Solution. Ataturk University Journal of Economics & Administrative Sciences, 28(3): 139-158.
[9] Cheng, B. S. 1995. An Investigation of Cointegration and Causality Between Energy Consumption and Economic Growth, The Journal of Energy and Development, 21(1): 73-84.
[10] Cheng, B. S., and Lai, T. W. 1997. An Investigation of Co-integration and Causality between Energy Consumption and Economic Activity in Taiwan, Energy Economics, 19(4): 435–444. Available at: http://dx.doi.org/10.1016/S0140-9883(97)01023-2
[11] Dagher, L., and Talar, Y. 2012. The Causal Relationship between Energy Consumption and Economic Growth in Lebanon. Energy Policy, 50: 795–801. Available at: http://dx.doi.org/10.1016/j.enpol. 2012.08.034
[12] Dickey, D. A., and Fuller, W. A. 1979. Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366a): 427-431. Available at: http://dx.doi.org/10.1080/01621459.1979.10482531
[13] Erol, U., and Yu, E.S. 1987. On the Causal Relationship between Energy and Income for Industrialized Countries, The Journal of Energy and Development, 13(1): 113-122.
[14] Esseghir, A., and Khouni, L. H. 2014. Economic Growth, Energy Consumption and Sustainable Development: The Case of the Union for the Mediterranean Countries. Energy, 71: 218–225. Available at: http://dx.doi.org/10.1016/j.energy.2014.04.050
[15] Fisher-Vanden, K. Jefferson, G. H., Liu, H., and Tao, Q. 2004. What Is Driving China’s Decline in Energy Intensity? Resource and Energy Economics, 26(1): 77-97. Available at: http://dx.doi.org/10.1016/ j.reseneeco.2003.07.002
[16] Ghosh, S.l 2002. Electricity Consumption and Economic Growth in India, Energy Policy, 30(2): 125-129. Available at: http://dx.doi.org/10.1016/S0301-4215(01)00078-7
[17] Glasure, Y. U., and Aie-Rie, L. 1997. Cointegration, Error-correction, and the Relationship between GDP and Energy: The Case of South Korea and Singapore. Resource and Energy Economics, 20(1): 17-25. Available at: http://dx.doi.org/10.1016/S0928-7655(96)00016-4
[18] Gomulka, S. 1990. The Theory of Technological Change and Economic Growth. London: Routledge.
[19] Hansen, B. E. 1996. Inference when a Nuisance Parameter Is Not Identified under the Null Hypothesis. Econometrica: Journal of the Econometric Society. 413-430. Available at: http://dx.doi.org/10.2307/2171789
[20] Hansen, B. E. 1999. Threshold Effects in Non-Dynamic Panels: Estimation, Testing, and Inference. Journal of Econometrics, 93(2): 345-368. Available at: http://dx.doi.org/10.1016/S0304-4076(99)00025-1
[21] Hansen, B. E. 2000. Sample Splitting and Threshold Estimation. Econometrica. 68(3): 575-603. Available at: http://dx.doi.org/10.1111/1468-0262.00124
[22] Herrerias, M.J., Joyeux, R., and Girardin, E. 2013. Short- and Long-run Causality between Energy Consumption and Economic Growth: Evidence across Regions in China. Applied Energy, 112: 1483–1492. Available at: http://dx.doi.org/10.1016/j.apenergy.2013.04.054
[23] Hondroyiannis, G., Lolos, S., and Papapetrou, E. 2002. Energy Consumption and Economic Growth: Assessing The Evidence from Greece, Energy Economics, 24(4): 319-336. Available at: http://dx.doi.org/10.1016/S0140-9883(02)00006-3
[24] Huang, B.-N., Hwang, M.J., and Yang, C.W. 2008. Does More Energy Consumption Bolster Economic Growth? An Application of the Nonlinear Threshold Regression Model, Energy Policy, 755–767. Available at: http://dx.doi.org/10.1016/j.enpol.2007.10.023
[25] Iyke, B. N. 2015. Electricity Consumption and Economic Growth in Nigeria: A Revisit of the Energy-Growth Debate. Energy Economics, 51: 166–176. Available at: http://dx.doi.org/10.1016/j.eneco. 2015.05.024
[26] Kavak, K. 2005. Energy Efficiency in the World and Turkey and Investigation of Energy Efficiency in Turkish Industry. Ankara: State Planning Organization (Turkey). DPT-2689. (10/10/2012), Available at: www.dpt.gov.tr/DocObjects/Download/3226/enerji.pdf
[27] Kraft, J., and Kraft, A. 1978. On the Relationship between Energy and GNP, Journal of Energy and Development, 3(2): 401-403.
[28] Lee, C. C., and Chang, C. P. 2007. The Impact of Energy Consumption on Economic Growth: Evidence from Linear and Nonlinear Models in Taiwan. Energy, 32(12): 2282–2294. Available at: http://dx.doi.org/10.1016/j.energy.2006.01.017
[29] Liao, H., Fan, Y., and Wei Y. M. 2007. What Induced China's Energy Intensity to Fluctuate: 1997-2006?. Energy Policy, 35(9): 4640-4649. Available at: http://dx.doi.org/10.1016/j.enpol.2007.03.028
[30] Lise, W., and Montfortc, K. V. 2007. Energy Consumption and GDP in Turkey: Is There a Co-integration Relationship? Energy Economics, 29(6): 1166–1178. Available at: http://dx.doi.org/10.1016/ j.eneco.2006.08.010
[31] Masih, A.M.M., and Masih, R. 1996. Energy Consumption, Real Income and Temporal Causality: Results from A Multi-Country Study Based on Cointegration and Error-correction Modelling Techniques. Energy Economics, 18(3): 165-183. DOI:10.1016/0140-9883(96)00009-6
[32] Mozumder, P., and Marathe, A. 2007. Causality Relationship between Electricity Consumption and GDP in Bangladesh. Energy Policy, 35(1): 395–402. Available at: http://dx.doi.org/10.1016/j.enpol. 2005.11.033
[33] Odhiambo, N. M. 2009. Energy Consumption and Economic Growth Nexus in Tanzania: An ARDL Bounds Testing Approach. Energy Policy. 37(2): 617-622. Available at: http://dx.doi.org/ 10.1016/j.enpol.2008.09.077
[34] Ouedraogo, N. S. 2013. Energy Consumption and Economic Growth: Evidence from the Economic Community of West African States (ECOWAS). Energy Economics, 36: 637–647. Available at: http://dx.doi.org/10.1016/j.eneco.2012.11.011
[35] Öztürkler, H. 2009. A Political Economic Evaluation on the Importance of Energy Resources in Middle East, Ortadoğu Analiz, 1(7-8): 74-79.
[36] Paul, S., and Bhattacharya, R. N. 2004. Causality between Energy Consumption and Economic Growth in India: A Note on Conflicting Results, Energy Economics, 26(6): 977-983. Available at: http://dx.doi.org/10.1016/j.eneco.2004.07.002
[37] Shahbaz, M., and Lean, H. H. 2012. The Dynamics of Electricity Consumption and Economic Growth: A Revisit Study of Their Causality in Pakistan. Energy, 39(1): 146–153. Available at: http://dx.doi.org/ 10.1016/j.energy.2012.01.048
[38] Shiu, A., and Lam, P. L. 2004. Electricity Consumption and Economic Growth in China. Energy Policy, 32(1): 47-54. Available at: http://dx.doi.org/10.1016/S0301-4215(02)00250-1
[39] Soytas, U., and Sari, R. 2003. Energy Consumption and GDP: Causality Relationship in G-7 Countries and Emerging Markets. Energy Economics. 25(1): 33–37. Available at: http://dx.doi.org/10.1016/S0140-9883(02)00009-9
[40] Stern, D. I. 2000. Multivariate Cointegration Analysis of the Role of Energy in the US Macroeconomy. Energy Economics, 22(2): 267–283. Available at: http://dx.doi.org/10.1016/S0140-9883(99)00028-6
[41] Tong, H. 1978. On A Threshold Model. 29: 575-586. Sijthoff & Noordhoff.
[42] Tsay, R. S. 1989. Testing and Modeling Threshold Autoregressive Processes. Journal of the American Statistical Association, 84(405): 231-240. Available at: http://dx.doi.org/10.1080/01621459.1989. 10478760
[43] Wesseh, P. K., and Zoumara, B. 2012. Causal Independence between Energy Consumption and Economic Growth in Liberia: Evidence from a Non-Parametric Bootstrapped Causality Test. Energy Policy, 50(ss): 518–527. Available at: http://dx.doi.org/10.1016/j.enpol.2012.07.053
[44] Wolde-Rufael, Y. 2006. Electricity Consumption and Economic Growth: A Time Series Experience for 17 African Countries. Energy Policy, 34(10): 1106–1114. Available at: http://dx.doi.org/10.1016/j.enpol. 2004.10.008
[45] Yılmaz, A., and Karataş, T. 2009. A study on the Causes of Current Account Deficits After 2001 Crisis in Turkish Economy, Marmara University Journal of Economic and Administrative Sciences, 27(2): 69-96.
[46] Yu, E.S.H., and Hwang, B. K. 1984. The Relationship between Energy and GNP: Further Results, Energy Economics, 6(3): 186-190. Available at: http://dx.doi.org/10.1016/0140-9883(84)90015-X
Published
2016-11-10
How to Cite
AYDIN, Celil; ESEN, Ömer.
Threshold Effects of Energy Consumption on Economic Growth in Turkey.
Journal of Environmental Management and Tourism, [S.l.], v. 7, n. 3, p. 370-382, nov. 2016.
ISSN 2068-7729.
Available at: <https://journals.aserspublishing.eu/jemt/article/view/346>. Date accessed: 20 apr. 2024.
Section
Journal of Environmental Management and Tourism
Keywords
energy consumption; energy intensity; economic growth; threshold regression analysis
Copyright© 2023 The Author(s). Published by ASERS Publishing 2023. This is an open access article distributed under the terms of CC-BY 4.0 license.