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Accounting for Nonlinearity, Asymmetry, Heterogeneity, and Cross-Sectional Dependence in Energy Modeling: US State-Level Panel Analysis

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  • Brantley Liddle

    (Energy Studies Institute, National University Singapore, Singapore 119620, Singapore)

Abstract

This paper provides an example of several modeling and econometric advances used in the panel estimation of energy demand elasticities. The paper models the demand of total, industrial, and transport energy consumption and residential and commercial electricity consumption by analyzing US state-based panel data. The paper employs recently developed dynamic panel methods that address heterogeneity, nonstationarity, and cross-sectional dependence. In addition, the paper (i) considers possible nonlinear relationships between energy consumption and income without employing polynomial transformations of integrated income; and (ii) allows for and calculates possible asymmetric relationships between energy consumption and price. Finally, the paper models energy efficiency improvements by a nonlinear time trend. To our knowledge no other paper has combined all of the econometric and modeling advances that are applied here. Most of the results conformed to expectations; however, limited to no evidence of nonlinearities and asymmetries were uncovered.

Suggested Citation

  • Brantley Liddle, 2017. "Accounting for Nonlinearity, Asymmetry, Heterogeneity, and Cross-Sectional Dependence in Energy Modeling: US State-Level Panel Analysis," Economies, MDPI, vol. 5(3), pages 1-11, August.
    • Handle: RePEc:gam:jecomi:v:5:y:2017:i:3:p:30-:d:108265
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    References listed on IDEAS

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    2. Cao, K.H. & Qi, H.S. & Li, R. & Woo, C.K. & Tishler, A. & Zarnikau, J., 2023. "An experiment in own-price elasticity estimation for non-residential electricity demand in the U.S," Utilities Policy, Elsevier, vol. 81(C).
    3. Boyoon Chang & Sung Jin Kang & Tae Yong Jung, 2019. "Price and Output Elasticities of Energy Demand for Industrial Sectors in OECD Countries," Sustainability, MDPI, vol. 11(6), pages 1-17, March.
    4. Chung-Siong Tang & Mori Kogid & James Alin & Brian Dollery, 2022. "Modelling Sectoral Energy Consumption in Malaysia: Assessing the Asymmetric Effects," Sustainability, MDPI, vol. 14(3), pages 1-17, February.

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