EconPapers    
Economics at your fingertips  
 

Decomposing structural decomposition: The role of changes in individual industry shares

Jakub Boratyński

Energy Economics, 2021, vol. 103, issue C

Abstract: Decomposition studies typically present structural change effect – such as the impact of changes in industry output shares on energy demand – as a single, aggregate contribution. However, if the purpose is to identify the role of individual sectors, an alternative approach is required. The generalised Divisia index method (GDIM) proposed by Vaninsky (2014) allows to decompose the structural change effect by attributing its parts to changes in individual shares. At the same time, GDIM takes into account interdependence of individual shares, stemming from the unit-sum constraint. In this paper we propose an arguably simpler and intuitive formulation of such a decomposition, building on the Harrison, Horridge, and Pearson (2000) decomposition method. This formulation also provides a rationale for the interpretation of individual share effects. We demonstrate that unravelling the pattern of structural change in a formal way can lead to identifying a few expanding or contracting activities as key contributors to change in energy use. This point is supported by an illustrative application, in which we decompose changes in electricity and heat demand in the European Union in the years 2000–2014.

Keywords: Structural decomposition analysis; Individual share effects; Energy demand decomposition; Generalised Divisia index method (GDIM) (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988321004552
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:103:y:2021:i:c:s0140988321004552

DOI: 10.1016/j.eneco.2021.105587

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-01-25
Handle: RePEc:eee:eneeco:v:103:y:2021:i:c:s0140988321004552