Oil products Consumption, Electricity Consumption - Economic growth Nexus in the Economy of Iran: A Bounds Testing Co-integration Approach

In this study we investigate the inter-temporal causal relationship among Economic growth, Oil products consumption, Electricity consumption and Price (intermittent variable) during 1973-2006. We employ the Autoregressive Distributed Lag (ARDL)-Bounds Testing approach by Pesaran et al (2001). The result of bounds test shows that there is long run co-integration among economic growth, Price, Oil products consumption and economic growth, Price, Electricity consumption. Also the result shows that there is unidirectional casual effect of Oil products consumption and Electricity consumption on economic growth and the impact of these two variables on economic growth in long run is negative. Hence, waste and deficient of oil product consumption and electricity consumption in long run are a deterrent for economic growth in Iran’s economy. Thus, energy saving policies should be selected by policymakers in Iran’s economy.