Aggregate and Disaggregate Energy Consumption Relation with GDP: Evidence for Iran

Abstract I n this paper we investigated total energy consumption and its individual forms (oil, natural gas, electricity, renewable energies and coal) relationship with real gross domestic product (GDP) in Iran. We employed Hsiao’s (1981) methodology and annual data which cover 1967-2010 for investigation. The empirical findings indicate there is bidirectional causality effect with real GDP and total energy consumption as well as its three individual forms including, oil, natural gas and electricity. Therefore we can accept feedback hypothesis about total energy consumption-GDP linkage. There is not any causality effect with other individual forms of energy such as renewable energies and coal with GDP. These results are not too surprising for Iran, because share of oil, natural gas and electricity is higher than other forms of energy.