Journal of Environment Management and Tourism 370 Threshold Effects of Energy Consumption on Economic Growth in Turkey Celil AYDIN Department of Economics, Faculty of Economics and Administrative Sciences Muş Alparslan University 2 , Turkey celil.aydin@atauni.edu.tr Ömer ESEN Department of Economics, Faculty of Economics and Administrative Sciences Muş Alparslan University, Turkey o.esen@alparslan.edu.tr Suggested Citation: Aydin, C., Esen, Ö. (2016). Threshold Effects of Energy Consumption on Economic Growth in Turkey, Journal of Environmental Management and Tourism, Volume VII, Fall), 3(15): 370 - 382. DOI: 10.14505/jemt.v7.3(15).02. Available from: http://www.asers.eu/journals/jemt/curent-issue. Article’s History: Received June, 2016; Revised July, 2016; Accepted August, 2016. 2016. ASERS Publishing. All rights reserved. Abstract: In this study 3 , the relationship between energy consumption and economic growth, and the effect of energy intensity level on this relationship are investigated for the period 1975-2013 for Turkey using recently developed Threshold Autoregressive (TAR) Models that provide appropriate procedures for estimation and inference. Although the majority of studies in the relevant literature support the view that energy consumption may promote economic growth, the empirical findings, based on the estimation of the threshold model, reveal evidence of threshold effects related to the energy consumption in Turkey. According to the analysis results, estimated value of the threshold is 0.191 for energy intensity level. The findings indicate that an energy consumption rate above the threshold energy density level adversely affects economic growth, and a consumption rate below the threshold level positively affects economic growth. These results show that when the optimal levels of energy density, which is one of the important indicators of energy efficiency, are exceeded, energy consumption considerably hinders economic growth. In this regard, political authorities and decision-makers should not ignore threshold levels within the context of energy density while determining energy policies. This is because this condition has a fundamental role in both increasing the effectiveness of implemented economic policies and realizing sustainable economic growth which has a significant place in stability. Keywords: energy consumption, energy intensity, economic growth, threshold regression analysis. JEL Classification: O13, Q41, Q43. 1. Introduction Economic development is an important criterion used in determining the development levels of societies. One of the most important factors determining the extent of economic development is capability to produce. The development level of a country depends on its capability to produce information, technology, goods, and services and to transform them into economic and social benefits. Energy is an important resource that is included in the classification of natural resources. It is utilized in all stages of production. Besides being a key input in the production process, it is also consumed as an output for enhancing the welfare levels of societies. The crucial role energy has as a production input was ignored until the oil crisis of the 1970s. Energy, to which a great importance is attached in today’s world, stands both as a production input and as one 2 49250, Muş, Turkey 3 This paper has been presented at 5 th World Conference on Business, Economics and Management Conference at 2016 (WCBEM) in Kemer/ Turkey. DOI: http://dx.doi.org/10.14505/jemt.v7.3(15).02