Abstract:

The pulling factor of the countries’ economic and social development and one of the basic necessities is energy. Not only the developed countries but also the developing countries need energy which can be defined as the capacity of doing business. In this paper, the causality relationship between energy consumption and GNP in Turkey is investigated, using data over the period of 1970-2008. Unit root tests for testing stationarity, Granger test for detecting causality, cointegration test for finding long run relationships and Vector error correction models are employed. The estimation results indicate that Real GNP and energy consumption are cointegrated and there is unidirectional Granger causality running from real GNP to energy consumption. This finding has significant implications from the point of view of energy conservation and economic growth. It is recommended that policies geared towards the expansion of the energy infrastructure should be intensified in order to cope with the increasing demand from industry. Also the government should secure the supply of energy in order to use the growth potential fully

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