Are shocks to electricity consumption permanent or transitory? Evidence from new panel stationarity tests with gradual structural breaks for 18 MENA countries

Jamal G. Husein and S. Murat Kara

Applied Economics Letters, 2024, vol. 31, issue 21, 2322-2327

Abstract: This study re-examines the stationarity properties of per capita electricity consumption in 18 MENA countries from 1980–2021. We use a novel panel stationarity test with a Fourier approximation to capture structural breaks and nonlinearities in the data. This Fourier panel test accounts for cross-sectional dependence and allows heterogeneity across cross-sections in the panel. Moreover, we apply several new panel stationarity tests that complement the aforementioned Fourier test. The study finds strong empirical evidence supporting the stationarity of per capita electricity consumption in the MENA region when considering smooth structural breaks, and our results remain unchanged using sharp structural breaks panel stationarity test. Therefore, we conclude that policies to manage energy demand will have no long-run effect as per capita electricity consumption will, after a shock, return to its long-run trend path.

Date: 2024
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DOI: 10.1080/13504851.2023.2227414

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