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Estimating Coal Price Dynamics with the Principal Components Method

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  • Festic, Mejra

    ()
    (Mejra Festić, Faculty of Economics and Business, University of Maribor; EIPF - Economic Institute, Ljubljana. SLOVENIA. mejra.festic@eipf.si; fax: 00386 2 250 81 77)

  • Repina, Sebastijan

    ()
    (EIPF - Economic Institute, Ljubljana.)

  • Volcjak, Robert

    ()
    (EIPF - Economic Institute, Ljubljana)

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    Abstract

    The future use of coal depends on environmental protection measures and the Kyoto Protocol, the price of CO2 emission coupons, consumption, new technologies, the price of other energy sources and the liberalization of the electricity markets. The prices of emission coupons will impact the costs of electricity energy production. Due to the relatively higher reference costs of alternative energy sources, we can not expect that the share of coal as an energy source will lower significantly as a source of electricity production in the future. From the point of view of regional economic aspects and the reference costs of electricity production, we could state that using coal in the near future is also tied to the socio-economic aspects of mining domestic coal. Using it in thermo plants is also enabled by the conditions of priority dispatching (since 2000) in the EU economies. We assessed the influence of prices and the use of other energy sources, environmental measures, energy efficiency and the influence of electricity market liberalisation on coal price movements. Our estimation shows that, if the prices of other energy sources and electricity increase, the price of coal increases. If the use of other energy sources increases, and if the gross uses of industrial waste and renewable resources increase, the price of coal decreases. Environmental protection measures contribute to an increase in coal prices. A higher quotient of energy efficiency decelerates the price of coal. And the euro (to dollar) appreciation decelerates coal prices.

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    Bibliographic Info

    Article provided by Institute for Economic Forecasting in its journal Romanian Journal for Economic Forecasting.

    Volume (Year): (2010)
    Issue (Month): 2 (July)
    Pages: 188-212

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    Handle: RePEc:rjr:romjef:v::y:2010:i:2:p:188-212

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    Related research

    Keywords: coal prices; environmental protection measures; priority dispatching;

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    1. Harris, David, 1997. "Principal Components Analysis of Cointegrated Time Series," Econometric Theory, Cambridge University Press, vol. 13(04), pages 529-557, August.
    2. Carlo Ambrogio Favero & Massimilano Marcellino & Francesca Neglia, . "Principal components at work: The empirical analysis of monetary policy with large datasets," Working Papers 223, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    3. Breusch, T S, 1978. "Testing for Autocorrelation in Dynamic Linear Models," Australian Economic Papers, Wiley Blackwell, vol. 17(31), pages 334-55, December.
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