Modeling the relationship between electricity consumption and financial development in Iran

Abstract

Since energy resources are of prime importance and limitation in Iran's economic developments, specifying the quality and quantity of the effective factors in energy requirments are of particular significance. In this research, first the effective factors on energy request as well as the effect of financial development along with GDP are surveyed. Then the population are surveyed in energy consumption along with ARDL technique using with Granger causality in the period of ( 1363-1390). Meanwhile, the long-run relationship among variables were verified using the test group of Pesaran. For more detailed evaluation of the obtained results of this study, the method of "bootstrap" is used to compute the standard deviation, confidence interval, correct bias and the statistical inference. The results show that financial development has a positive and meaningful effect on the electricity consumption. Also it show that there is bi-directional causality between financial development and economic growth. and causality is from financial development to electricity consumption. Electricity consumption is affected by both economic and financial development. According to the results of the study, to achieve economic development, the demand for energy, in addition to financial development should carefully examined.

Keywords

• financial development
• electricity consumption
• gdp
• bootstrap technique
• granger causality test