A Study of Causality Relationship between GDP and Electricity Consumption in Iran during the Period ۱۹۶۷-۲۰۰۶ by Toda-Yamamoto Test

Considering the close relationship between energy (including electricity) consumption and economic growth in the world economy the determination of the quantity and the quality of such a relationship within the Iranian economy could be helpful for the conception and definition of the electricity sector's policies. This article investigates the existence of Granger’s Causality relationship between electricity consumption and GDP of Iran during ۱۹۶۷-۲۰۰۶ and tries to determine the direction of this causality. For this purpose, we firstly survey the stationarity of electricity and GDP variables. Then, using the Toda-Yamamoto Method, we test the causality relationship between these two variables. According to the results, we can advance that in Iran the economic growth is prior to electricity consumption. So, the electricity reduction policy could be followed without any difficulty for economic growth.