Impact of Oil Different Products Consumption on Economic Growth in Iran Provinces

The main objective of this study is to investigate the relationship between different oil products consumption and economic growth in Iran provinces. The basic question is whether the reduction of different oil products consumption caused by subsidy reform plan decelerates the economic growth or not? To answer this question, we use Panel Data model and quarterly data during 2000Q1-2006Q4 at provincial level. The results indicate that gasoline and gasoil consumption have positive and significant effect on economic growth of the provinces, such that the elasticity of provinces products compared to the gasoline and gasoil consumption is 0.22 and 0.19 respectively. The results also represent that the development expenditures of government and population have positive and significant effect on economic growth. The ratio of population elasticity to the production is larger than the ratio of the production elasticity to the development expenditures of government. According to this research, it can be argued that the limitation of oil products consumption can decelerate the economic growth in Iran provinces.