The main determinants of energy consumption in Turkish economy: A time series analysis

The main aim of this thesis is to empirically analyze the main determinants of energy consumption in Turkish economy. The study dwelled on the impact of economic growth, financial development, capital, industrialization and trade openness on energy consumption by using the time series data over the period of 1975-2015. The ADF, PP, DF-GLS, KPSS and Ng-Perron tests were used for the unit root analyses. In addition, the Lee-Strazicich test with one break was used for the unit root analyses. The ARDL bounds test was preferred to investigate cointegration between the series. The Granger and Toda-Yamamoto causality tests were applied to determine the causal linkages between the series. The results obtained from the structural break unit root analysis revealed that the variables were stationary at level or first difference. This unit root findings enabled us to use the ARDL bounds test approach. The results of ARDL bounds test determined the presence of a long run relationship between the variable in all three models. The long run estimation results concluded that economic growth, financial development, capital, industrialization and trade openness increase energy consumption. According to the causality results, one-way causality running from trade openness and financial development to energy consumption were detected. The findings from the thesis will present important suggestions related to energy policies.