Will initiatives to promote hydroelectricity consumption be effective? Evidence from univariate and panel LM unit root tests with structural breaks

Hooi Hooi Lean () and Russell Smyth

No 47-13, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper examines whether initiatives to promote hydroelectricity consumption are likely to be effective by applying univariate and panel Lagrange Multiplier (LM) unit root tests to hydroelectricity consumption in 55 countries over the period 1965 to 2011. We find that for the panel, as well as about four-fifths of individual countries, that hydroelectricity consumption is stationary. This result implies that shocks to hydroelectricity consumption in most countries will only result in temporary deviations from the long-run growth path. An important consequence of this finding is that initiatives designed to have permanent positive effects on hydroelectricity consumption, such as large-scale dam construction, are unlikely to be effective in increasing the share of hydroelectricity, relative to consumption of fossil fuels.

Pages: 38 pages
Date: 2013-07
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Journal Article: Will initiatives to promote hydroelectricity consumption be effective? Evidence from univariate and panel LM unit root tests with structural breaks (2014)
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