Persistence in per capita energy consumption: A fractional integration approach with a Fourier function |
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| Affiliation: | 1. Department of Economics, Faculty of Economics and Administrative Sciences, Hatay Mustafa Kemal University, 31060, Hatay, Turkey;2. Department of Economics, Faculty of Economics and Administrative Sciences, Kutahya Dumlupınar University, 43000, Kutahya, Turkey;3. Department of Business Administration, Faculty of Economics and Administrative Sciences, Hatay Mustafa Kemal University, 31060, Hatay, Turkey;1. Erciyes University, Faculty of Economics and Administrative Sciences, Assistant Professor in Economics Department, Kayseri 38039, Turkey;2. Global Footprint Network, Director in Research Department, 312 Clay Street, Suite 300, Oakland, CA 94607-3510, USA;1. Dean and Professor of Economics, J. Whitney Bunting College of Business, Georgia College & State University, Milledgeville, GA 31061, USA;2. Deputy Director and Senior Research Associate, The Institute of Economics, Zagreb, Croatia;3. Professor of Economics and Rick and Elaine Horsley Faculty Fellow, Department of Economics, Finance and Legal Studies, University of Alabama, Tuscaloosa, AL 35486, USA;1. Gümüşhane Üniversity, Faculty of Economics and Administrative Sciences, Department of Economics, Gümüşhane, Turkey;2. Sakarya University, Faculty of Policital Sciences, Department of Economics, Sakarya, Turkey;1. Faculty of Economics and Administrative Sciences, Department of Economics, Osmaniye Korkut Ata University, 80000, Merkez, Osmaniye, Turkey;2. Faculty of Political Sciences, Department of Econometrics, Sakarya University, Esentepe Campus, 54055, Serdivan, Sakarya, Turkey |
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| Abstract: | In this study, we investigate the degree of persistence for aggregate energy consumption per capita for 113 countries over the period 1960–2014 through a recently introduced fractional unit root test with a Fourier function to allow multiple smooth structural breaks. We also employ the ADF unit root test, the efficient Wald test for fractional unit-roots, and the Fourier ADF test to make a comparison and to enrich the study. The empirical results considering the fractional Fourier unit root test indicate two crucial points. First, shocks have only temporary effects on energy consumption per capita, and it will vanish slowly as a result of the long memory characteristic. Therefore even transitory shocks have persistence effects, which require permanent policies due to their nature. This inference is different from what would be erroneously suggested by the dichotomous approach for stationarity and nonstationarity that temporary shocks will have transitory effects. Second, the integration degree of energy consumption per capita may change due to the existence of a structural break; therefore, policymakers must be aware of the varying integration degree to design and implement the best policies. |
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