Threshold Effects of Energy Consumption on Economic Growth in Turkey
Threshold Effects of Energy Consumption on Economic Growth in Turkey

Summary/Abstract: In this study3, the relationship between energy consumption and economic growth, and the effect of energyintensity level on this relationship are investigated for the period 1975-2013 for Turkey using recently developedThreshold Autoregressive (TAR) Models that provide appropriate procedures for estimation and inference. Although themajority of studies in the relevant literature support the view that energy consumption may promote economic growth, theempirical findings, based on the estimation of the threshold model, reveal evidence of threshold effects related to theenergy consumption in Turkey. According to the analysis results, estimated value of the threshold is 0.191 for energyintensity level. The findings indicate that an energy consumption rate above the threshold energy density level adverselyaffects economic growth, and a consumption rate below the threshold level positively affects economic growth. Theseresults show that when the optimal levels of energy density, which is one of the important indicators of energy efficiency,are exceeded, energy consumption considerably hinders economic growth. In this regard, political authorities anddecision-makers should not ignore threshold levels within the context of energy density while determining energy policies.This is because this condition has a fundamental role in both increasing the effectiveness of implemented economicpolicies and realizing sustainable economic growth which has a significant place in stability.

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