Sectoral energy consumption by source and economic growth in Turkey

Abstract

This paper provides a detailed analysis of the energy consumption in Turkey during the last 40 years. It investigates the causal relationships between income and energy consumption in two ways: first, the relationship is studied at the aggregate level; then, we focus on the industrial sector. Previous findings suggest that, in the case of Turkey, there is a unidirectional causality running from energy consumption to growth. However, our findings suggest that in the long run, income and energy consumption appear to be neutral with respect to each other both at the aggregate and at the industrial level. We also find a strong evidence of instantaneous causality, which means that contemporaneous values of energy consumption and income are correlated. Furthermore, a descriptive analysis is conducted in order to reveal the differences in the use of energy resources. We conclude that energy conservation policies are necessary for environmental concerns and our empirical results imply that such policies would not impede economic growth in the long term.