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Estimating underlying energy demand trends using UK annual data

Dimitropoulos, J, Hunt, LC and Judge, G (2005) Estimating underlying energy demand trends using UK annual data Applied Economic Letters, 12 (4). 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
Additional Information: This is an electronic version of an article published in Applied Economics Letters, 12(4), pp. 239-244. Applied Economics Letters is available online at: www.tandfonline.com and the article can be found online at: http://www.tandfonline.com/doi/abs/10.1080/1350485052000337789
Uncontrolled Keywords: ECONOMIC-ACTIVITY, CONSUMPTION, SEASONALITY, TRANSPORT
Divisions: Faculty of Business, Economics and Law > Economics
Depositing User: Symplectic Elements
Date Deposited: 19 Apr 2012 11:07
Last Modified: 23 Sep 2013 19:21
URI: http://epubs.surrey.ac.uk/id/eprint/380525

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