Modelling sectoral energy consumption in Malaysia: assessing the asymmetric effects

Tang, Chung-Siong and Mori Kogid and James Eng @ James Mohd. Alin and Dollery, Brian (2022) Modelling sectoral energy consumption in Malaysia: assessing the asymmetric effects. Sustainability, 14 (1816). pp. 1-17. ISSN 2071-1050

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Abstract

Economic growth, energy prices, technological innovations, and financial depth all play a vital role in sectoral energy consumption. Early studies have extensively examined the interactions among these variables, which are important in developing policies on energy consumption. However, to date, most studies have estimated energy consumption in a linear fashion. If the actual relationship is non-linear or asymmetric, then the inferences drawn from a linear framework may be misleading. Hence, in this study, we employed a non-linear autoregressive distributed lag (NARDL) approach to analyse Malaysian sectoral energy consumption from 1978 to 2016. We found that the bounds test of the NARDL indicates the presence of cointegration among the variables. The key findings include: (1) a rise in income increases energy consumption throughout all sectors, but sectoral energy consumption does not respond significantly to a fall in income; (2) both increases and decreases in energy prices reduce industrial energy consumption, but residential and commercial sectors’ energy consumption react positively to price falls; (3) technological advancement increases transportation energy consumption; and (4) both an increase and decrease of credit availability to private sectors reduce industrial energy consumption, but transportation energy consumption reacts positively to financial deepening. Moreover, the effects at the sectoral level were asymmetrical. The findings indicate that the changes in selected macroeconomic variables were found to have a Granger causality effect on sectoral energy consumption. Given these findings, our study offers empirical support for the inclusion of non-linearity or asymmetric effects when modelling sectoral energy consumption.

Item Type:	Article
Keyword:	Sectoral energy consumption , Asymmetric effects , NARDL , Malaysia
Subjects:	H Social Sciences > HC Economic history and conditions > HC10-1085 Economic history and conditions > HC94-1085 By region or country
Department:	FACULTY > Faculty of Business, Economics and Accounting
Depositing User:	SAFRUDIN BIN DARUN -
Date Deposited:	02 Aug 2022 10:06
Last Modified:	02 Aug 2022 10:06
URI:	https://eprints.ums.edu.my/id/eprint/33607

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