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What trends in energy efficiencies? Evidence from a robust test

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  • Le Pen, Yannick
  • Sévi, Benoît

Abstract

A proper modeling of the long-run behavior of energy and oil intensities is crucial in many respects. This paper aims at checking whether this long-run behavior should be modelled as a deterministic or a stochastic trend or both. We first apply a test for a deterministic trend robust to uncertainty about the stochastic trend. Our results indicate that, for the period 1960-2004, energy intensities of only 8 OECD countries out of 25 include a negative deterministic trend, 3 include a positive one and 14 seem to be better modelled by a stochastic trend only. When considering a sample of 73 non-OECD countries on the period 1971-2004, we show that only 22 exhibit a deterministic trend (negative for 15 countries and positive for 7 countries). A similar analysis for oil intensity leads to reject the hypothesis of an insignificant deterministic trend for 7 OECD countries out of 23 for the period 1965-2004 and 11 non-OECD countries out of 40 for the period 1971-2004. In the next step, we apply standard unit root tests and find that the unit root hypothesis is not very often rejected. We conclude that a main feature of energy intensities is the presence of a stochastic trend.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 32 (2010)
Issue (Month): 3 (May)
Pages: 702-708

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Handle: RePEc:eee:eneeco:v:32:y:2010:i:3:p:702-708

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Web page: http://www.elsevier.com/locate/eneco

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Keywords: Energy intensity Oil intensity Deterministic linear trend Stochastic trend;

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