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A re-examination of stationarity of energy consumption: Evidence from new unit root tests

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  • Hasanov, Mübariz
  • Telatar, Erdinc

Abstract

In this paper, we re-examine the stochastic behaviour of per capita total primary energy consumption across 178 countries around the world. For this purpose, in addition to conventional unit root tests, we apply newly developed tests that allow for nonlinear adjustments and structural breaks in the data generating process. The results of the unit root tests show that allowing for structural breaks and nonlinearity result in more frequent rejection of the null hypothesis of unit root, suggesting that most of the series under consideration follow a stationary process. These findings imply that both energy economists and policy makers must be careful and take account of possible nonlinearities and structural breaks in their analyses of energy consumption. In addition, the results imply that government interventions into the energy markets in most countries have no effect in the long run, although the short-run effects of the interventions depend on the size and the direction of interventions.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 39 (2011)
Issue (Month): 12 ()
Pages: 7726-7738

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Handle: RePEc:eee:enepol:v:39:y:2011:i:12:p:7726-7738

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

Related research

Keywords: Energy consumption; Nonlinearity; Structural break;

References

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Cited by:
  1. Hooi Hooi Lean & Russell Smyth, 2012. "Are fluctuations in production of renewable energy permanent or transitory?," Development Research Unit Working Paper Series 05-12, Monash University, Department of Economics.
  2. Suleyman Bolat & Murat Belke & Necati Celik, 2013. "Mean Reverting Behavior of Energy Consumption: Evidence from Selected MENA Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 3(4), pages 315 - 320.
  3. Barros, Carlos Pestana & Gil-Alana, Luis A. & Payne, James E., 2013. "U.S. Disaggregated renewable energy consumption: Persistence and long memory behavior," Energy Economics, Elsevier, vol. 40(C), pages 425-432.
  4. Russell Smyth, 2012. "Are fluctuations in energy variables permanent or transitory? A survey of the literature on the integration properties of energy consumption and production," Development Research Unit Working Paper Series 04-12, Monash University, Department of Economics.
  5. Lean, Hooi Hooi & Smyth, Russell, 2013. "Will policies to promote renewable electricity generation be effective? Evidence from panel stationarity and unit root tests for 115 countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 22(C), pages 371-379.
  6. Shahbaz, Muhammad & Kumar Tiwari, Aviral & Ozturk, Ilhan & Farooq, Abdul, 2013. "Are fluctuations in electricity consumption per capita transitory? Evidence from developed and developing economies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 28(C), pages 551-554.
  7. Lean, Hooi Hooi & Smyth, Russell, 2014. "Are shocks to disaggregated energy consumption in Malaysia permanent or temporary? Evidence from LM unit root tests with structural breaks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 319-328.
  8. Belbute, José, 2013. "Does final demand for energy in Portugal exhibit long memory?," MPRA Paper 45717, University Library of Munich, Germany.
  9. Muhammad, Shahbaz & Tiwari, Aviral Kumar & Khan, Saleheen, 2012. "Is Energy Consumption Per Capita Stationary? Evidence from First and Second Generation Panel Unit Root Tests," MPRA Paper 41607, University Library of Munich, Germany, revised 27 Sep 2012.
  10. Tolga Omay & Mubariz Hasanov & Nuri Uçar, 2012. "Energy Consumption and Economic Growth: Evidence from Nonlinear Panel Cointegration and Causality Tests," Hacettepe University Department of Economics Working Papers 20130, Hacettepe University, Department of Economics.

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