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The Effect of Government Size and Good Governance on Energy Consumption Intensity: A Case Study of OPEC Countries

Author

Listed:
  • Shahbazi, Kiumars

    () (Associate Professor of Economics, Urmia University)

  • Hekmati Farid , Samad

    () (Assistant Professor of Economics, Urmia University)

  • Rezaei, Hadi

    () (MA Student of Economics, Urmia University)

Abstract

Due to affluence of oil and its low price in OPEC countries, energy consumption in these countries is higher than world standards. So, Management of demand side of energy and offering solutions to decrease the energy consumption have been economists’ and policy makers’ concern in energy field. The government is one of the major institutions that affect energy consumption management. Hence, this paper investigates the nonlinear effect of government size and good governance on energy consumption intensity in OPEC countries during 2002-2011 using the panel smooth transition regression (PSTR) and the variables such as industrial value added and population are used as control variables. The results show that hypothesis of linear relationship between government size, good governance and energy consumption intensity is rejected and suggested model has two regimes with one threshold level. In the first regime, the government size, good governance and population have significant and negative effect and industrial value added has significant and positive effect on energy consumption intensity. In the second regime, after the threshold level, government size and industrial value added have significant and positive effect, and population and good governance have significant and negative effect on energy consumption intensity.

Suggested Citation

  • Shahbazi, Kiumars & Hekmati Farid , Samad & Rezaei, Hadi, 2016. "The Effect of Government Size and Good Governance on Energy Consumption Intensity: A Case Study of OPEC Countries," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 2(4), pages 23-48, March.
  • Handle: RePEc:ris:qjatoe:0025
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    More about this item

    Keywords

    Energy Consumption Intensity; Government Size; Good Governance; PSTR;

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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