Relationship between Economic Growth and Energy Consumption in Iran (Analysis of Linear and Non-linear Causality Models)

The causal relation between energy consumption and economic growth، as an imperative issue in energy economics، has been a well-studied topic. Previous studies in Iran have ignored the nonlinear behavior which could be caused by structural breaks. In this study، both linear and nonlinear causality test are applied to examine the causal relationship between energy consumption and economic growth in Iran. The nonlinear causality test، applied here، is based on the conception of correlation integral (an estimator of spatial probability across time). In this study، we find evidence on a unidirectional linear and nonlinear causality running from energy consumption to economic growth.