On the estimation of short- and long-run elasticities in U.S. petroleum consumption: comment.
Southern Economic Journal › Vol. 62 Nbr. 3, January 1996
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Summary
Comment on article by C.T. Jones, Southern Economic Journal, p. 687, 1993
An examination of the time-series properties of the US data for petroleum consumption, the real price of oil and real GNP revealed that all three seem to be non-stationary I(1) processes that do not cointegrate. Such finding implies two things, either there is no stable long-run relationship between the levels of petroleum consumption, the real price of oil and real GNP or there is one or more significant variable missing in explaining energy usage in the long run.See the full content of this document
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On the estimation of short- and long-run elasticities in U.S. petroleum consumption: comment.
I. Introduction
In a recent paper in this journal, Jones [13] has advocated for the use of the general-to-simple modelling strategy in estimating short- and long-run elasticities in energy consumption. In contrast to the simple-to-general modelling approach, which is most often used in energy demand studies, the general-to-simple strategy starts by estimating a deliberately overparameterized unrestricted autoregressive distributed lag model. Various parameter restrictions are then tested sequentially until a parsimonious representation of the underlying data-generating-process is obtained.(1) In an empirical application using this approach, with U.S. time-series data for petroleum consumption, the real price of oil, and real GNP, ...See the full content of this document
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