Jamal G. Husein, Sahit Murat Kara
This study re-examines the stationarity properties of per capita electricity consumption for 25 OECD countries during the 1960-2014 period. We apply a newly developed panel stationarity test that models structural shifts as a gradual process via a Fourier function. This Fourier panel stationarity test takes cross-sectional dependence into account and allows heterogeneity across cross-sections in the panel. However, rather than assuming the presence of a structural shift or a nonlinear deterministic component, we formally test the linearity hypothesis of each time-series utilizing a novel test. Moreover, for robustness check, we apply a panel stationarity test incorporating abrupt structural breaks and employ several new panel stationarity tests that complement the Fourier panel test. For the period of study, we find strong empirical evidence supporting stationarity of per capita electricity consumption for the 25 OECD countries.
Therefore, shocks to electricity consumption will have a transitory effect as per capita electricity consumption will, after a shock, return to its longrun trend path.
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