Redefinition of the Relation between Energy Consumption and Economic Growth in Iran: Markov Switching Approach

The purpose of this study is finding the relationship between energy consumption and economic growth in the industry and transport sector in developed and developing provinces in Iran through Markov switching model during 2000-2010. The results indicate a positive effect of energy consumption growth on value added growth in industry and transportation both in developed and developing provinces. But, the positive effect of energy consumption will be increased by moving from recession to economic boom phrase. The results imply that the relation between energy consumption and economic growth in transportation sector is more than industry and there is an asymmetric relation between energy consumption and economic growth.