Unravelling Trends and Seasonality: A Structural Time Series Analysis of Transport Oil Demand in the UK and Japan

Abstract

This paper demonstrates the importance of adequately modelling the Underlying Energy Demand Trend (UEDT) and seasonality when estimating transportation oil demand for the UK and Japan. The structural time series model is therefore employed to allow for a stochastic underlying trend and stochastic seasonals using quarterly data from the early 1970s, for both UK and Japan. It is found that the stochastic seasonals are preferred to the conventional deterministic dummies and, more importantly, the UEDT is found to be highly non-linear for both countries, with periods where it is both upward and downward sloping.

What drives the change in UK household energy expenditure and associated CO2 emissions? Implication and forecast to 2020

“…This allows for the estimation of a stochastic rather than a deterministic underlying energy expenditure trend (UEET) 9 , which arguably is important when estimating the elasticities of demand as discussed by Hunt and Ninomiya [7]. The UEET is likely to be strongly affected by changes in technology, tastes, consumer preferences, socio-demographic and geographic factors, lifestyles and values, which are not easily measured and/or therefore difficult to obtain any suitable data.…”

“…Each 'carbon budget' covers a five-year period. Following the EU framework, the UK Committee on Climate Change has proposed two set of budgets 7 : one to apply once a global deal on emissions reductions has been agreed i.e. 'intended budget'; and the other to apply for the period before there is a global deal i.e.…”

“…The 'intended budget' requires a cut in CO2 emissions of 6 This paper is a part of the Research group on Lifestyles Values and Environment (RESOLVE) project, part of which, requires the investigation and analysis of expenditures for different categories of UK household consumption. 7 The core function of UK Committee on Climate Change is to recommend the required level of the UK's 'carbon budget'.…”

“…As mentioned in the introduction, an attempt is made to quantify the contributions of the economic drivers (income and price), energy intensity and exogenous non- 17 For further details, refer to [7]. 18 ^ refers to estimated coefficients and components.…”

Corrigendum to “Missing carbon reductions? Exploring rebound and backfire effects in UK households” [Energy Policy 39 (2011) 3572–3581]

“…ELESA is an econometric scenario modelling tool in which a Structural Time Series Model (STSM) (Harvey 1989) is used to independently estimate household expenditure equations for each of the 16 categories presented in Table 1, using UK quarterly time series data for 1964:q1 to 2009:q1. This allows examination of the relationship between household expenditure, income, prices, temperature 10 and a stochastic (rather than deterministic) underlying trend which is arguably important when estimating the elasticities (Hunt and Ninomiya 2003). The underlying trend is likely to be affected by technical progress, changes in tastes, consumer preferences, socio-demographic and geographic factors, lifestyles and values, which are not easily measured, and therefore difficult to obtain any suitable data.…”