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Investigating the Stationarity Properties of Oil Consumption: an Empirical Analysis for OECD Countries

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  • Fatma Kızılkaya

    (Malatya Turgut Özal Üniversitesi, Sağlık Bilimleri Fakültesi, Malatya-Türkiye)

Abstract

In a changing and developing world, production activities are dependent on energy resources. A significant part of the energy needed in the world is obtained from fossil fuels. Petroleum is one of the three main types of fossil fuels, along with natural gas and coal, widely used in various economic activities such as transportation, construction, industry, housing, and electricity generation. The limited reserves of petroleum, which have a wide usage area, is a significant problem. Due to the close relationship between energy consumption and macroeconomic variables, policymakers must investigate the stationarity properties of energy consumption. If energy consumption is stationary, a shock to energy consumption will be temporary. However, if the energy consumption is not stationary, the effect of the shocks will be permanent. This study investigates whether oil consumption is stationary for OECD countries. The analyses are carried out using a panel stationarity test with sharp and smooth breaks for 1965-2019. In this test procedure, dummy variables, in which the break dates are determined endogenously, are used for sharp breaks, while the Fourier approach captures smooth breaks. The findings reveal that the oil consumption series is stationary for the panel. Since the oil consumption series does not include a unit root, it is understood that the shocks to oil consumption are temporary and will return to their previous state in time. According to the individual stationarity test results, the oil consumption series for 23 countries is obtained as stationary. According to these results, it is possible to say that the policies to be implemented for sustainable development goals in OECD countries may have different effects on each country.

Suggested Citation

  • Fatma Kızılkaya, 2022. "Investigating the Stationarity Properties of Oil Consumption: an Empirical Analysis for OECD Countries," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(1), pages 121-137, January.
    • Handle: RePEc:ist:iujepr:v:9:y:2022:i:1:p:121-137
    DOI: 10.26650/JEPR1030877
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    More about this item

    Keywords

    Oil consumption; Panel stationarity test; Fourier; Energy; OECD countries JEL Classification : C23 ; C50 ; Q43;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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