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Investigating the dependence of energy prices and economic growth rates with emphasis on the development of renewable energy for sustainable development in Iran

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  • Daryoosh Borzuei
  • Seyed Farhan Moosavian
  • Abolfazl Ahmadi

Abstract

Concerns about greenhouse gas emissions and global warming have raised the need to use renewable sources. The expansion of the use of renewable resources has a deep relationship with energy consumption, its price, and economic growth. Therefore, based on the threshold regression approach, this study evaluates the effect of price and energy consumption on renewable energy development in Iran's different economic growth regimes. In this regard, by collecting economic data in Iran over 30 years, using STATA software, and forming a threshold regression model, the asymmetric effect of energy prices on energy consumption is investigated. The results showed a threshold for regression equal to 7.28% in the annual GDP growth rate data. According to the threshold value, economic analysis is divided into two parts: economic growth below the threshold and economic growth above the threshold. The results show a negative and significant relationship between the energy price index and the share of renewable energy in Iran during high economic growth. The reason for this is related to the unstable and intermittent growth of the economy, unprincipled management of resources due to increased revenues due to rising energy prices, energy subsidies, and the private sector's reluctance to invest in cheap renewable energy fossil fuels.

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  • Daryoosh Borzuei & Seyed Farhan Moosavian & Abolfazl Ahmadi, 2022. "Investigating the dependence of energy prices and economic growth rates with emphasis on the development of renewable energy for sustainable development in Iran," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(5), pages 848-854, October.
    • Handle: RePEc:wly:sustdv:v:30:y:2022:i:5:p:848-854
    DOI: 10.1002/sd.2284
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