The Effect of Fiscal Policy Variables on Energy Intensity of Selected Developing Countries

Optimum use of energy as one of the production inputs has been one of the main goals of many countries in the world (especially after the first oil shock of 1973). The sensitivity about the optimal energy consumption in the production sectors in developed countries is much higher than in developing countries, because many developing countries (especially oil countries) have better primary energy resources compared to most developed countries, which leads to the lack of sensitivity of this group of countries in optimal energy consumption. Energy intensity is one of the indicators of optimal energy consumption, which is affected by various variables, such that the variables representing fiscal policies are one of them. Therefore, the purpose of this paper is to study the impact of fiscal policy variables on the energy intensity of selected developing countries during the period of 2010-2020 using the generalized moments model (GMM). To achieve the goal of the research, three models have been estimated that, in addition to the control variables, government spending variables, paid subsidies and taxes are included as three variables (representing fiscal policies) in three separate models. The estimation results of the models show that the impact of taxes and government expenses on energy intensity in the selected developing countries is negative and significant, but the impact of subsidies paid on the energy intensity of the mentioned group of countries is positive and significant.