Impacts of Technological Innovation, Economic Growth, Global Oil Price and Trade Openness on Energy Consumption in Iran

Abstract

Despite its rich energy resources, Iran is one of the top energy-intensive countries in the world. Improving technology and using new innovations in energy consumption and the production process of goods can reduce energy intensity in the country. In order to investigate the effects of technological innovation on energy consumption, this study uses the Marshallian Demand Framework and bounds testing within the Autoregressive-Distributed Lags (ARDL) method during 1980-2017. The results of this study showed that technological innovation, as an exogenous element in the energy demand function, increases energy efficiency and thus reduces energy consumption at a certain level of economic production. The results of this study confirm the theoretical predictions that the short-run GDP elasticities of energy demand are less than the long-term ones. However, controlling the effect of technological innovation, the study finds that increasing GDP and trade openness create rebound effects of technology innovation on energy consumption.

Keywords

• marshallian demand function
• ardl (autoregressive distributed lags)
• energy consumption
• trade openness
• technological innovation