The Nonlinear Impact of Energy Consumption On Economic Growth and Emission in Iran, Smooth Transition Regression Model.

Document Type: Original Article

Authors

1 Assistant Professor, Department of Agricultural and Environmental Economics, Faculty of Economics, Allameh Tabatabai University, Tehran, Iran

2 Associate Professor, Department of Energy Economics, Allameh Tabatabai University, Tehran, Iran

3 Employee of the Ministry of Oil in OPEC and PHD student

10.22050/pbr.2019.119149

Abstract

The present study tries to find out the effect of energy consumption on economic growth and emission through applying non-linear framework, the smooth transition regression model, and threshold regression TAR by using the data from1969 to 2017. The results of empirical frameworks indicate that the economic growth is gradually affected by energy consumption and STR model demonstrates the dynamics. However, the changes in energy consumption on emission has taken place faster and the parametric changes have been more severe. In both states, there is one model which consists of two regimes. In this model, the fossil fuel energy consumption growth variable is selected as transition or threshold variable which is optimal model. The fossil fuel energy consumption variable is considered as a policy variable which in both frameworks have been selected in 12 percent level.
The results of TAR model revealed that in high regime of fossil fuel consumption, the first lag of fossil fuel consumption and the logarithm of population have impact on emission and in high regime of low fossil fuel consumption, the fist lag on variable growth of fossil fuel consumption and electricity have impact on emission. Also, the results of TAR model indicated that the electricity energy consumption growth in low regime, the growth in electricity consumption and first lag investment affect the economic growth. The fossil fuel consumption in high regime, the growth variables of fossil fuel consumption and investment have impact on the economic growth.

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