The Relationship Between Energy Consumption and Economic growth in Iran

This paper estimates the causal relationships between energy consumption and income for Iran using co integration and error-correction modeling techniques. The results indicate that, in the long-run, uni-directional Granger causality runs from income to energy. The study results support neutrality hypothesis, which proposes that the cost of energy is a small proportion of GDP, and so it should not have a significant impact on output growth. Hence, energy saving does not harm economic growth.