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Estimating underlying energy demand trends using UK annual data

journal contribution
posted on 2023-06-07, 20:57 authored by John Dimitropoulos, Lester C Hunt, Guy Judge
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.

History

Publication status

  • Published

Journal

Applied Economics Letters

ISSN

1350-4851

Publisher

Taylor & Francis

Issue

4

Volume

12

Page range

239-244

Pages

26.0

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-02-06

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