Urbanization and Energy consumption in Iran: Application of STIRPAT Model

Considering the importance of urbanization and its relationship with energy sources, it is necessary to examine the relationship between these two variables for policy making. Accordingly, this paper reinvestigates the relationship between urbanization and energy consumption in case of Iran for the period of 1375-1393 by employing the STIRPAT (Stochastic Impact by Regression on Population, Affluence and Technology) model and autoregressive distribution lag (ARDL) Bound Test. Long-term results show that logarithms of urbanization and its square have a positive effect on energy consumption. The positive effect of transportation on energy consumption is shown that energy is the technology used in this industry. The increase in GDP per capita has increased energy consumption. The relationship between technology and energy consumption suggests the function of return effects. Short-term results also confirm the positive impact of urbanization. Short-term relationships between economic growth and energy consumption are positive. Technology has negative effect and transportation will positively affect energy consumption in the short term. Our empirical results indicate that the short run deviations stem in energy demand function is corrected by 15.39% in each quarter and will take 1 year and 2 months to achieve stable long run equilibrium path. Based on the Granger causality results, energy consumption is a major cause of urbanization.