The effects of energy price on energy intensity: evidence from Canadian manufacturing sector

This study provides estimates for the long-run elasticity of energy intensity with respect to energy price in Canadian manufacturing industries. The time-series properties of the data are investigated using panel unit root, and the long-run relationships are ascertained based on panel co-integration tests. Estimation of long-run elasticities is then conducted using panel error correction and panel fully modified ordinary least square (PFMOLS) methods. The estimated long-run elasticity is in the tune of ?0.4 for the overall manufacturing sector, but there is significant variation across the industries.