Agricultural Energy Consumption-Economic Growth Relationship in Turkish Economy: A Hidden Cointegration Analysis

According to energy economists, the energy factor underlies economic growth and development. In this approach, energy is accepted as an indispensable production factor in the production of all goods and services. In addition, it is known that agricultural activities are at the forefront at the beginning of development, and a structural transformation has taken place from agriculture to industry and from the industrial sector to the service sector. However, due to the developments in the world economy in recent years and the fact that the agricultural sector plays a key role in the country, many countries attach special importance to the development of this sector. The development of the agricultural sector brings the need to increase the amount of energy used by this sector. The increase in energy costs day by day puts the agriculture sector in a difficult situation, and how the increasing energy consumption will affect the economic growth of the country emerges as a research topic. The literature investigating the relationship between energy consumption and economic growth rarely addresses this issue on a sectoral basis. In this context; It is important whether energy consumption in the agricultural sector can affect economic growth. This study aims to investigate the relationship between agricultural energy consumption and economic growth for the Turkish economy in the period of 1990-2018. The results of the ADF and PP unit root tests used for the stationarity analysis of the variables reveal that the variables become stationary at the first difference. The long-term relationship between the variables is investigated using the Hatemi J-Irandoust hidden cointegration test, which is one of the new generation tests. The coefficients of the variables and the causality relationship are examined with the FMOLS technique and the hidden error correction model, respectively. The findings show the existence of a cointegration between the + component of agricultural energy consumption and the + component of economic growth. The findings also indicate the existence of a positive relationship between the + component of agricultural energy consumption and the + component of economic growth. Finally, there is a unidirectional causality running from the + component of economic growth to + component of agricultural energy consumption. These results show that agricultural energy consumption has an impact on Turkey's economic growth. The study can offer some policy recommendations related to the agricultural sector for the growth of the Turkish economy.