The relationship between energy consumption-current deficit-exchange rate: An analysis on oecd countries

The current account deficit, which may occur when the expenditure of a country exceeds its product, affects many macroeconomic variables negatively unless it is financed. Balancing of this deficit, first of all, arising from the insufficient savings level, necessitates reduction of import expenditures, while items such as exchange rates and production costs also play an active role. When developing countries are examined, most of their balance of payments is made up of foreign trade. For this reason, countries having foreign trade surplus usually do not have the problem of current account deficit. The main reason of the current account deficit is that countries that are inadequate in terms of energy resources and are dependent on the outside by using more than they produce. In this study, the relationship between energy consumption, current account deficit and exchange rate was tested by panel data analysis among OECD countries over models established with annual datum covering 1985-2015 period. Before analysis, Levin, Lin and Chu - LLC (2002), Breitung (2000), Im, Pesaran and Shin (2003), ADF - Fisher Chi - square and PP - Fisher Chi - square stationary tests were applied in order to identify if the serials contain unit root. As a result of the Pedroni Cointegration Test and Kao Cointegration tests used in the panel data analysis, it was concluded that there is a long cyclical cointegration relation between the variables. According to Panel Granger Causality Test results, one-way causality relation from current account deficit to energy consumption was found.