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Disentangling temporal patterns in elasticities: A functional coefficient panel analysis of electricity demand

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  • Chang, Yoosoon
  • Choi, Yongok
  • Kim, Chang Sik
  • Miller, J. Isaac
  • Park, Joon Y.

Abstract

We introduce a panel model with a nonparametric functional coefficient of multiple arguments. The coefficient is a function both of time, allowing temporal changes in an otherwise linear model, and of the regressor itself, allowing nonlinearity. In contrast to a time series model, the effects of the two arguments can be identified using a panel model. We apply the model to the relationship between real GDP and electricity consumption. Our results suggest that the corresponding elasticities have decreased over time in developed countries, but that this decrease cannot be entirely explained by changes in GDP itself or by sectoral shifts.

Suggested Citation

  • Chang, Yoosoon & Choi, Yongok & Kim, Chang Sik & Miller, J. Isaac & Park, Joon Y., 2016. "Disentangling temporal patterns in elasticities: A functional coefficient panel analysis of electricity demand," Energy Economics, Elsevier, vol. 60(C), pages 232-243.
  • Handle: RePEc:eee:eneeco:v:60:y:2016:i:c:p:232-243
    DOI: 10.1016/j.eneco.2016.10.002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Fakhri J. Hasanov & Lester C. Hunt & Ceyhun I. Mikayilov, 2016. "Modeling and Forecasting Electricity Demand in Azerbaijan Using Cointegration Techniques," Energies, MDPI, Open Access Journal, vol. 9(12), pages 1-31, December.
    2. repec:gam:jeners:v:10:y:2017:i:11:p:1918-:d:119727 is not listed on IDEAS
    3. Julián Pérez-García & Julián Moral-Carcedo, 2017. "Why Electricity Demand Is Highly Income-Elastic in Spain: A Cross-Country Comparison Based on an Index-Decomposition Analysis," Energies, MDPI, Open Access Journal, vol. 10(3), pages 1-20, March.
    4. Chang, Yoosoon & Kim, Chang Sik & Miller, J. Isaac & Park, Joon Y. & Park, Sungkeun, 2014. "Time-varying Long-run Income and Output Elasticities of Electricity Demand with an Application to Korea," Energy Economics, Elsevier, vol. 46(C), pages 334-347.
    5. Yoosoon Chang & Chang Sik Kim & J. Isaac Miller & Joon Y. Park & Sungkeun Park, 2014. "Time-varying Long-run Income and Output Elasticities of Electricity Demand," Working Papers 1409, Department of Economics, University of Missouri.
    6. Salisu, Afees A. & Ayinde, Taofeek O., 2016. "Modeling energy demand: Some emerging issues," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 1470-1480.

    More about this item

    Keywords

    Semiparametric panel regression; Partially linear functional coefficient model; Elasticity of electricity demand;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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