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Will initiatives to promote hydroelectricity consumption be effective? Evidence from univariate and panel LM unit root tests with structural breaks

  • Hooi Hooi Lean
  • Russell Smyth

This paper examines whether initiatives to promote hydroelectricity consumption are likely to be effective by applying univariate and panel Lagrange Multiplier (LM) unit root tests to hydroelectricity consumption in 55 countries over the period 1965 to 2011. We find that for the panel, as well as about four-fifths of individual countries, that hydroelectricity consumption is stationary. This result implies that shocks to hydroelectricity consumption in most countries will only result in temporary deviations from the long-run growth path. An important consequence of this finding is that initiatives designed to have permanent positive effects on hydroelectricity consumption, such as large-scale dam construction, are unlikely to be effective in increasing the share of hydroelectricity, relative to consumption of fossil fuels.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2013/index.html
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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 47-13.

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Length: 38 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:mos:moswps:2013-47
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