Disaggregated energy consumption and GDP in Taiwan: A threshold co-integration analysis

Jin-Li Hu*, Cheng Hsun Lin

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

116 Scopus citations

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., Seo, 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 in Taiwan.

Original languageEnglish
Pages (from-to)2342-2358
Number of pages17
JournalEnergy Economics
Volume30
Issue number5
DOIs
StatePublished - 1 Sep 2008

Keywords

  • Asymmetric adjustment
  • Disaggregated energy consumption
  • GDP
  • Threshold co-integration

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