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Residential Energy Demand Analysis: An Empirical Application of the Closure Test Principle


  • Madlener, Reinhard
  • Alt, Raimund


In this paper a set of ten different single-equation models of residential energy demand is being analyzed, derived by the imposition of linear parameter restrictions on a fairly general autoregressive distributed lag (ADL) model. Residential energy consumption is assumed to be explainable by households' real disposable income, movements in the real price of energy, and the temperature variable 'heating degree days.' In the empirical application, Austrian annual data for the period 1970 to 1992 are used. The main focus of the paper is on the control of the overall significance level of the tests based on the application of the closure test principle, introduced by Marcus, Peritz, and Gabriel (1976). The application illustrates nicely how one can, by defining a closed system of hypotheses, control the significance level alpha in supporting the search for a suitable specific model. The wide range of estimated elasticities, however, indicates that the estimation results depend strongly on the choice of the model specification.

Suggested Citation

  • Madlener, Reinhard & Alt, Raimund, 1996. "Residential Energy Demand Analysis: An Empirical Application of the Closure Test Principle," Empirical Economics, Springer, vol. 21(2), pages 203-220.
  • Handle: RePEc:spr:empeco:v:21:y:1996:i:2:p:203-20

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    References listed on IDEAS

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    Cited by:

    1. Roberto Roson & Enrica de Cian & Elisa Lanzi, 2007. "The Impact of Temperature Change on Energy Demand a Dynamic Panel Analysis," Working Papers 2007_06, Department of Economics, University of Venice "Ca' Foscari".
    2. Enrica De Cian & Elisa Lanzi & Roberto Roson, 2013. "Seasonal temperature variations and energy demand," Climatic Change, Springer, vol. 116(3), pages 805-825, February.
    3. Alt, Raimund & Fortin, Ines & Weinberger, Simon, 2011. "The Monday effect revisited: An alternative testing approach," Journal of Empirical Finance, Elsevier, vol. 18(3), pages 447-460, June.
    4. Alt, Raimund & Fortin, Ines & Weinberger, Simon, 2002. "The Day-of-the-Week Effect Revisited: An Alternative Testing Approach," Economics Series 127, Institute for Advanced Studies.

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