The relationship of economic variables and final energy consumption: multiple linear regression evidence

School of Informatics and Applied Mathematics, Universiti Malaysia Terengganu, 21030 Kuala Terengganu, Malaysia

Corresponding author: lazim_m@umt.edu.my

Abstract

Energy consumption in developing countries is sharply increasing due to higher economic growth of industrialization along with population growth and urbanization. This paper provides a multiple linear regression evidence to illustrate the association between final energy consumption and three economic variables. Multiple linear regression analysis was used to obtain a predictive equation and to check for linearity assumption. Three input variables, viz. growth domestic product, population, and tourism are the predictors for final energy consumption. Time series yearly data of final energy consumption and the three input variables for the year 2001 until 2012 was retrieved from various databases. It is found that there was a significant variation in the final energy consumption explained by the three variables. The multiple linear regression equation indicates that the ‘population’ is the most influential variable in predicting final energy consumption.