Title: Disaggregated energy consumption and GDP in Taiwan: A threshold co-integration analysis
Authors: Hu, Jin-Li
Lin, Cheng-Hsun
Institute of Business and Management
Keywords: disaggregated energy consumption;GDP;threshold co-integration;asymmetric adjustment
Issue Date: 1-Sep-2008
Abstract: Energy consumption growth is much higher than economic growth for Taiwan in recent years, worsening its energy efficiency. This paper provides a solid explanation by examining the equilibrium relationship between GDP and disaggregated energy consumption under a non-linear framework. The threshold co-integration test developed with asymmetric dynamic adjusting processes proposed by Hansen and Seo [Hansen, B.E., See, B., 2002. Testing for two-regime threshold cointegration in vector error-correction models. Journal of Econometrics 110, 293-318.] is applied. Non-linear co-integrations between GDP and disaggregated energy consumptions are confirmed except for oil consumption. The two-regime vector error-correction models (VECM) show that the adjustment process of energy consumption toward equilibrium is highly persistent when an appropriately threshold is reached. There is mean-reverting behavior when the threshold is reached, making aggregate and disaggregated energy Consumptions grow faster than GDP it) Taiwan. (C) 2007 Elsevier B.V. All rights reserved.
URI: http://dx.doi.org/10.1016/j.eneco.2007.11.007
ISSN: 0140-9883
DOI: 10.1016/j.eneco.2007.11.007
Volume: 30
Issue: 5
Begin Page: 2342
End Page: 2358
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