The determinants of oil consumption in Tunisia: Fresh evidence from NARDL approach and asymmetric causality test

This paper examines the asymmetric impact of oil price, economic growth, financial development, and industrialization on oil consumption in Tunisia, using the Nonlinear Autoregressive Distributed Lag (NARDL) model over the period 1980-2020. The NARDL bound testing approach confirms the presence of a cointegrating relationship between oil demand and its determinants. The results show that oil demand is income elastic and price inelastic. In the long run, the impact of increased and decreased financial development on oil consumption is found positive and negative, respectively. The findings also highlight that a positive (negative) shock to industrialization decreases (increases) energy consumption. The study of symmetrical causality supports the feedback hypothesis between growth and consumption. However, the asymmetric causality analysis shows that only negative shocks to economic growth have impacts on oil demand. The Tunisian economic model could be oriented in such a way as to support economic activity and implement energy saving policies. Finally, the implications of the different findings are discussed and key recommendations for policymakers are also provided.