Decomposition Analysis of Debt’s Impact on Energy Consumption of Iranian Economic Sectors with Using the Logarithmic Mean Divisia Index

Abstract

Several factors affect the changes in energy consumption in Iran. One of these factors is debt, which can affect energy consumption through consumption and investment channels. The purpose of this study is to analyze other aspects of the share of factors affecting changes in energy consumption. This study with emplying logarithmic mean divisia index (LMDI), analyzed the effect of debt on Iran’s energy consumption at the level of economic sectors and the whole economy including three effects related to the production and three effects related to the debt for the period 2006 to 2016. They were considered in three formats, including chain-linked, pair-wise, and pair-wise five-year periods. The results from sectoral and macro perspective indicate that particularly in the sub-period of 2004-2005, the effect of debt structure had the highest share in increasing energy consumption. Besides, the effect of government debt was the highest share in energy consumption reduction.

Keywords

• energy consumption.index decomposition analysis (ida)
• logarithmic mean divisia index (lmdi)
• structural effect . debt