The effect of leading macroeconomic indicators on energy consumption: The case of Türki̇ye

Energy consumption is of significant macroeconomic importance. Studies have shown that energy consumption influences macroeconomic indicators, and conversely, macroeconomic indicators affect energy consumption. This study deviates from the general trend in the literature by examining the impact of macroeconomic indicators on energy consumption. The macroeconomic indicators chosen for analysis include Gross Domestic Product (GDP), imports, exports, and foreign direct investments. Two separate models were developed using annual data from Turkey spanning the years 1970 to 2022 to examine fosil and renewable energy consumption. Various traditional unit root testing methods, such as the Augmented Dickey-Fuller (ADF) test, as well as structural break unit root tests like Perron and Zivot-Andrew tests, were applied. Based on the results of the stationarity tests, cointegration relationships were identified using the Autoregressive Distributed Lag (ARDL) method. Subsequently, causality relationships were examined using theToda-Yamamoto test. The findings revealed that both models exhibited cointegration relationships, and it was observed that the country's GDP negatively impacts both fosil energy and renewable energy consumption. This suggests an improvement in energy efficiency for fosil fuel consumption and a shift towards an energy-saving production structure, while also indicating that production still heavily relies on fosil fuels for renewable energy consumption. Additionally, it was discovered that renewable energy consumption has bidirectional causality relationships with GDP, exports, and foreign direct investments. Furthermore, a unidirectional causality relationship was identified between exports and energy consumption. However, bidirectional causality was observed between exports and fosil energy consumption, and a unidirectional causality was noted from fosil energy consumption to foreign direct investments.