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Are Fluctuations in Gas Consumption Per Capita Transitory? Evidence from LM Unit Root Test with Two Structural Breaks

Author

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  • Muhammad Shahbaz

    (Energy Research Centre, COMSATS Institute of Information Technology, Lahore, Pakistan)

  • Sakiru Adebola Solarin

    (Room 5012, Faculty of Business, Multimedia University Malaysia, Melaka, Malaysia)

  • Hrushikesh Mallick

    (Centre for Development Studies (CDS), Prasanth Nagar, Ulloor, Trivandrum-695011, Kerala, India)

Abstract

With a view to determine the effectiveness of the policies aimed at boosting natural gas consumption, this paper examines the unit root properties of natural gas in 44 countries, for the period 1965 to 2010. Applying the LM unit root tests, which allow for a maximum of two structural breaks, we are able to reject the null hypothesis of unit root in the natural gas consumption series in 57% of the countries. A key policy implication of this finding is that initiatives designed to have permanent positive effects on natural gas, such as construction of large natural gas pipeline network, are likely to be effective in increasing the share of natural gas consumption in only 43% of the total sample.

Suggested Citation

  • Muhammad Shahbaz & Sakiru Adebola Solarin & Hrushikesh Mallick, 2015. "Are Fluctuations in Gas Consumption Per Capita Transitory? Evidence from LM Unit Root Test with Two Structural Breaks," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 3(4), pages 203-209, December.
    • Handle: RePEc:ijr:beejor:v:3:y:2015:i:4:p:203-209
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    References listed on IDEAS

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    Cited by:

    1. Solarin, Sakiru Adebola & Lean, Hooi Hooi, 2016. "Are fluctuations in oil consumption permanent or transitory? Evidence from linear and nonlinear unit root tests," Energy Policy, Elsevier, vol. 88(C), pages 262-270.
    2. Yifei Cai & Cosimo Magazzino, 2019. "Are shocks to natural gas consumption transitory or permanent? A more powerful panel unit root test on the G7 countries," Natural Resources Forum, Blackwell Publishing, vol. 43(2), pages 111-120, May.
    3. Schneider, Nicolas & Strielkowski, Wadim, 2023. "Modelling the unit root properties of electricity data—A general note on time-domain applications," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 618(C).
    4. Solarin, Sakiru Adebola & Ozturk, Ilhan, 2016. "The relationship between natural gas consumption and economic growth in OPEC members," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1348-1356.
    5. Shahbaz, Muhammad & Omay, Tolga & Roubaud, David, 2019. "Sharp and Smooth Breaks in Unit Root Testing of Renewable Energy Consumption: The Way Forward," MPRA Paper 92176, University Library of Munich, Germany, revised 11 Feb 2019.

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    More about this item

    Keywords

    Gas Consumption; Stationary; Structural Breaks;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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