Bayesian Model Averaging application on Energy consumption model In Saudi Arabia
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The paper attempts to establish the determinants of energy use in Saudi Arabia over the period (1971 - 2011) Using Bayesian model averaging approach (BMA). In the literature, there are several explanatory variables that have been used as determinants of energy consumption. However, these models have the problem of uncertainty regarding the best choice of the variables and the model specification. Thus the use of BMA will solve the model uncertainty. The choice of the variables did not limit to previous studies’ explanatory variables but extended to include some socio-economic effects. The study concludes that among the nine variables that have been applied, export and industry value added are the first and second most important variables affecting energy consumption; the carbon dioxide comes third then population growth considered the fourth effective variable to influence energy consumption in Saudi Arabia.