Electricity Consumption and Economic Growth: Long-Term Co-Integrated Analysis on Turkey

Energy and especially electricity consumption is a variable that can be also considered as the indication of the social development as far as economic growth is concerned. Energy, as the input of the industry and other production branches, is an indication for the production increase; and also for consumption with regards to raising the living standards of the consumers. In literature with its situation, it is argued that the electricity consumption is included the mutual causality relation with the growth data in a long-term. As there are several empirical studies that support this hypothesis, in some economies, especially it may sometimes be concluded that the data of the energy utilization in the production area can negatively affect growth in the long-term. Therefore, the literature does not come to the agreed results for the relation between these two variables. In this study, the causality relations have been analyzed by dividing the electricity consumption into three categories; residential, industrial and others, based on the data of the Turkish economy. In the lights of the obtained findings, it is concluded that in long term, there is at most one long-term co-integrating vector between GDP and electricity consumed in residential and industrial areas and also two-way causality relation between GDP and electricity consumed in these sectors. In this case, electricity consumption can be considered as an indicator for both growth and social development.


Introduction
Whereas electricity is an economic value which is increasingly required for the improvement of human living conditions, some of the methods of generating power are at the center of critiques since they have reached the levels that threaten such human living conditions. Energy consumption has a wide literature in terms of both aspects. While industrial demand for energy is directly proportional to economic growth; consumer demand is directly proportional to economic development. Dhungel (2008) defines these two issues together as "national economic and social development". A similar point of view is expressed by Leung and Meisen (2005) that increase in power consumption … However, the studies made afterwards and those basic studies referred to almost in every studies can be shown as Akarca andLong (1980), Yu andChoi (1985), Erol and Yu (1988), Abosedra and Baghestani (1989;, Hwang andGum (1991, 1992), Cheng (1995), Masih and Masih (1997), Glasure andLee (1997), Soytaş, Sarı andÖzdemir (2001), Soytaş and Sarı (2003), Lee (2005), … Joyeux and Ripple (2007), Joyeux and Ripple (2010) and different findings are obtained in many studies such as these due to the direction of causality in particular, the differences that may evolve out of different country and groups of countries and development levels of countries and their macroeconomic conjuncture .

Theory and Literature
In theory, increase in the amount of energy consumption in a closed economy, as well as the increases either in households or industrial sectors, can be considered as the indicators of economic and social development….

Energy Consumption
Although it can be mentioned about an economic and social development for the increase in energy amount in an open economy as well; it may end up with the reflection (Kibritçioğlu and Kibritçioğlu, 1999) of … Whereas the theoretical Açıklama [BK1]: Standart A4 paper. Margins: Right and Left 4 cm. Ceiling: 3 cm and bothbottom: 3 cm. Times New Roman (TNR) 11 punto for whole text. No gutter. There wil be no space between paragraphs and blank lines.

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relation between growth and energy consumption involves a linear relation especially in neo-classical economy (Hamilton, 1983;Burbridge and Harisson 1984;Ghali and Sakka, 2004); the point of view which deals with energy as the most efficient factor on growth and refers to it as biophysics considers labor and capital as collateral factors. Such point of view deals with economy as a subthermodynamic system (Cleveland et al., Aytaç, 2010 narrating from 1984).

Data Set and Method
Based on the data of Turkish Economy, Although it is …

Findings
Unit root analyses for the series are executed thereby using three different tests. It is initially carried out for Additional Dickey-Fuller (ADF) Test. … Results are indicated in Table-1.  As a result of tests performed for each three series, although they include unit root as of their levels, series become stationary as a consequence of taking their first difference. All three levels become stationary at the same level. This situation indicates that series are integrated at I(1) level. Therefore, prerequisite is ensured for investigation of whether or not there is co-integration and long term relation between them. Lag length is calculated for LR, FPE, AIC, SC, and HQ criteria and 1 lag length is obtained to be the proper lag.
In order to determine long term relations of variables, two-staged Eangle-Granger (1987) co-integration test is performed. In first step, regression equations are constructed between variable pairs which are assumed to be related in long term. In second step, ADF, PP and KPSS unit root tests are performed for error terms of regressions and it is anticipated that level of value of error term series are stationary at [I(0)]….

GRAPH 1: Average Growth Rates
When Trace and Max-Eigenvalue statistics are analyzed, "There is cointegration" hypothesis will be true as long as such statistics are higher than 0.05 of significance level….

GRAPH 2: Average Growth Rates
When Trace and Max-Eigenvalue statistics are analyzed, "There is co-integration" hypothesis will be true as long as such statistics are higher than 0.05 of significance level.
When Trace and Max-Eigenvalue statistics are analyzed, "There is cointegration" hypothesis...

Conclusion
By the analyses carried out thereby using annual data that belong .…

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