Estimating underlying energy demand trends using UK annual data

Dimitropoulos, John, Hunt, Lester C and Judge, Guy (2005) Estimating underlying energy demand trends using UK annual data. Applied Economics Letters, 12 (4). pp. 239-244. ISSN 1350-4851

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Abstract

Employing the Structural Time Series Model (STSM) approach suggested by Harvey (1997), and based on annual data for the UK from 1967–2002, this paper reiterates the importance of using a stochastic rather than a linear deterministic trend formulation when estimating energy demand models, a practice originally established by Hunt et al. (2003a, 2003b) using quarterly UK data. The findings confirm that important non-linear and stochastic trends are present as a result of technical change and other exogenous factors driving demand, and that a failure to account for these trends will lead to biased estimates of the long-run price and income elasticities. The study also establishes that, provided these effects are allowed for, the estimated long-run elasticities are robust to the different data frequencies used in the modelling.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Subjects: H Social Sciences > H Social Sciences (General)
Depositing User: EPrints Services
Date Deposited: 06 Feb 2012 18:41
Last Modified: 24 Sep 2012 08:57
URI: http://sro.sussex.ac.uk/id/eprint/17741
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