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Functional form and aggregate energy demand elasticities: A nonparametric panel approach for 17 OECD countries

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  • Karimu, Amin
  • Brännlund, Runar

Abstract

This paper studies whether the commonly used linear parametric model for estimating aggregate energy demand is the correct functional specification for the data generating process. Parametric and nonparametric econometric approaches to analyzing aggregate energy demand data for 17 OECD countries are used. The results from the nonparametric correct model specification test for the parametric model rejects the linear, log-linear and translog specifications. The nonparametric results indicate that the effect of the income variable is nonlinear, while that of the price variable is linear but not constant. The nonparametric estimates for the price variable is relatively low, approximately −0.2.

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  • Karimu, Amin & Brännlund, Runar, 2013. "Functional form and aggregate energy demand elasticities: A nonparametric panel approach for 17 OECD countries," Energy Economics, Elsevier, vol. 36(C), pages 19-27.
  • Handle: RePEc:eee:eneeco:v:36:y:2013:i:c:p:19-27
    DOI: 10.1016/j.eneco.2012.11.026
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    More about this item

    Keywords

    Cointegration; Log-linear; Panel data and specification test;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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