Are shocks to natural gas consumption transitory or permanent? A more powerful panel unit root test on the G7 countries

This article re‐examines the persistence in natural gas consumption using an alternative methodology. We compare the results of traditional panel unit root tests with those provided by Bahmani‐Oskooee et al., which allow for both sharp and smooth breaks. Our analysis uses data for the G7 countries o...

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Bibliographic Details
Published inNatural resources forum Vol. 43; no. 2; pp. 111 - 120
Main Authors Cai, Yifei, Magazzino, Cosimo
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.05.2019
Wiley Subscription Services, Inc
Subjects
Economic models
Empirical analysis
Energy consumption
Energy demand
Energy management
Energy policy
G7 countries
Natural gas
Natural gas consumption
panel unit root
Purchasing power parity
structural breaks
Test procedures
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Summary:This article re‐examines the persistence in natural gas consumption using an alternative methodology. We compare the results of traditional panel unit root tests with those provided by Bahmani‐Oskooee et al., which allow for both sharp and smooth breaks. Our analysis uses data for the G7 countries over the 1965–2016 years. The empirical findings show that while traditional unit root tests with sharp breaks lean towards the non‐stationarity of the series for all the G7 countries, modeling breaks in our unit root testing methodology can assert that natural gas consumption is non‐stationary only for Canada, France, Italy, and USA. These results imply that, for the majority of our sample, energy demand management policies designed to shrink energy consumption will have temporary effects, as energy consumption will return to its trend path.
ISSN:0165-0203
1477-8947
DOI:10.1111/1477-8947.12169