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The Relationship Between Energy Consumption and Income in Residential & Commercial Sectors of Iran Using STR

5 Abstract: Residential and commercial sectors, share a significant portion of energy consumption in Iran; 37 percent of the total per capita consumption. Therefore, identification of the relation between revenue and energy consumption could be a great assistance to policy makers for clarification of policies employed in energy sector. This paper attempts to explore and analyze the relationship between revenue and energy consumption in residential and commercial sectors for the years 1969 to 2009 in Iran by Smooth Transition Regression Models. Smooth transition regression model is a nonlinear time series model which can be considered as a developed form of Switching Regression Model. The obtained results indicate that in the long and short term there is a nonlinear and inverse relationship between energy consumption in residential and commercial sectors and gross domestic production while there is a direct and nonlinear relationship between energy consumption in residential and commercial sectors and value-added of residential sector and population. Ultimately, if a gross domestic production, residential sector value added and population increase, energy consumption in residential and commercial sectors will decrease about 0.66 and increase about 17.72 and 1.15 respectively.