Energy Intensity of GDP: A Nonlinear Estimation of Determinants in Iran

Energy intensity is a measure of the energy efficiency of a nation’s economy. Many factors influence a country’s energy intensity. In this paper, however, we note the effective factors of energy intensity and decompose it by applying Logistic Smooth Transition Regression (LSTR) in Iran during the period 1980- 2013. The main factors are the ratio of the added value of services to GDP (explaining both linear and nonlinear part of the energy intensity), the percentage of internet users, income per capita and Human Development Index (explaining nonlinear part of the energy intensity). The results indicated that the lifestyle and structural changes had a significant and considerable effect on decreasing energy intensity and that the ratio of services value-added to GDP as a transition variable caused an asymmetric behavior of energy intensity affected from explanatory variables. The most effective factor on energy intensity was Human Development Index.