Energy Consumption and Economic Growth: Kalman Filter Approach

Abstract

This paper studies the relationship between energy consumption and economic growth for Iran during 1967-2008.we use time varying parameter (TVP) Approach to estimate effect of energy consumption on GDP over time. Our main finding is theenergy consumptionhas a positive sign and it is statistically significant .the final coefficient is 0.037. This parameter varies trivially over time and fluctuations are rather stable.