Relationship between energy consumption and economic growth: Panel VAR analysis

The relationship between energy consumption and economic growth goes back to the roots of the transformation in the energy sector that began with the Industrial Revolution. Energy revolutions that started with coal, followed by oil and natural gas in the 20th century brought prosperity and wealth. Energy transitions transformed economic activities, resulting in more flexible and decentralized production processes, encouraging demographic and social transformations, and changing political structures. This process has placed the global economy in an increasingly orbit of increasing energy consumption. The developments in the energy sector have been reflected in all sectors of the economy as energy is a key input in the production process. The aim of this thesis, the 1990-2014 time period, Turkey, Russia and Iran using a sample set of under the production function of Cobb-Douglas to investigate the relationship between the growth and energy. The Cobb-Douglas generation function is formed by using the variables of GDP, energy use, electricity consumption, capital and labor, and in order to determine the relationship between variables, static panel VAR model and causality analysis methodologies were followed. Panel VAR model variance decomposition findings; It is observed that most of the changes in GDP in the short and long term are caused by itself, followed by labor, electricity consumption, capital and energy use, respectively. The findings of the effect-response functions explained that GDP had significant responses to self-induced shocks for approximately 10 months. It was observed that the labor force reacted significantly on GDP from the 2nd month and this response period lasted until the 12th month; It was seen that the most important variable that gave significant reactions on GDP during all periods was electricity consumption and the other important variable was energy use. Panel causality test results; GDP of labor and capital, capital of labor and electricity consumption, labor force is the one-way cause of energy use. Key Words: Energy Consumption, Economic Growth, Turkey-Russia-Iran Countries, Panel VAR Analysis, Dumitrescu Hurlin Panel Causality Test.