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Are Shocks To Energy Consumption Permanent Or Temporary? Evidence From 182 Countries

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  • Paresh Kumar Narayan
  • Russell Smyth

Abstract

This paper applies univariate and panel data unit root tests to annual panel data for 182 countries over the period 1979-2000 to examine the stationarity properties of per capita energy consumption. The univariate unit root test can only reject the unit root null for 29 per cent of the countries at the 10 per cent level or better without a trend and 37 per cent of the countries at the 10 per cent level or better with a trend. However, it is often argued that unit root tests have low power with short spans of data and therefore failure to reject the unit root null should be treated with caution. When we apply the panel data unit root test we find overwhelming evidence that energy consumption is stationary. We discuss the implications of these findings for econometric modeling and policy formulation.

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Bibliographic Info

Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 06/05.

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Length: 18 pages
Date of creation: 01 May 2005
Date of revision:
Handle: RePEc:mos:moswps:2005-06

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Keywords: Energy consumption; Unit roots; Panel data;

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