The relationship between energy and production: Evidence from Turkish manufacturing industry

Date

2007-11-01

Author

Soytaş, Uğur
Sarı, Ramazan

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This paper investigates the relationship between energy and production at the industry level in an emerging market, Turkey, in a multivariate framework. The electricity consumption and value added relation is examined in the Turkish manufacturing industry, while also accounting for labor and fixed investment. We find that labor, fixed investment, electricity consumption, and value added are related via three cointegrating vectors. The VEC results indicate uni-directional causality running from electricity consumption to value added. Generalized impulse response and variance decomposition analyses confirm these results. Thus, energy input appears to be closely related to production. Hence, energy saving technologies and increased energy efficiency may increase the growth in manufacturing value added.

Subject Keywords

Energy Consumption, Output, Granger Causality, Cointegration, VEC

URI

https://hdl.handle.net/11511/48214

Collections

Department of Business Administration, Article