Analysis and Investigation of the Relation between Economic Growth and Gasoline and Gas Oil Demand in Iran's Transportation System (Ground-Rout)

This article aims to investigate the relationship between fuel demand and economic growth in the period of 1966-2005 using the Vector Auto Regressive (VAR) methods and Granger causality test and Vector Error Correction estimation (VEC) and Johansen Cointegration test. The results suggest a long term relation between gasoline annual consumption and gross domestic product (GDP). The results of variance decomposition show that GDP has the highest impact on itself and the gasoline consumption variation is mainly defined by the GDP. Incorporating gas oil annual consumption, the results of variance decomposition show that GDP has the highest impact on itself and the gas oil annual consumption variation is mainly defined by GDP. The results of estimation incorporating gas oil annual consumption to the model show that that GDP has the highest impact on itself and the gas oil annual consumption variation is mainly defined by itself. The Granger causality test runs one-way from GDP to gasoline annual consumption and not the other way but it does not show any relationship between GDP and gas oil annual consumption. The results of VEC estimation confirm the results of granger causality test. The Johansen Cointegration test shows a relation between GDP and gasoline and gas oil annual consumption in long term.