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Modeling and Forecasting the Demand for Electricity in New Zealand: A Comparison of Alternative Approaches

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  • Koli Fatai
  • Les Oxley
  • Frank G. Scrimgeour

Abstract

Models of energy demand in New Zealand have typically been based upon either a partial general equilibrium approach or constructed from spreadsheet models. The results created by such methods predict that electricity is forecast to be the fastest growing energy demanded by households and the industrial sectorfor the next two decades. Furthermore, aggregate electricity demand is forecast to grow at a constant rate for the next two decades. In this paper we attempt to model and forecast electricity demand using a number of recent econometn'c approaches including Engle-Granger’s Error Correction Model, Phillip and Hansen’s (1990) Fully Modified Least Squares, and the AutoRegressive Distributed Lag (ARDL) approach of Pesaran et al. (1996, 1998). We identify the model with the smallest forecasting error using a series offorecasting measures and conclude that the new ARDL approach of Pesaran et al, has better forecasting performance than the other approaches considered.

Suggested Citation

  • Koli Fatai & Les Oxley & Frank G. Scrimgeour, 2003. "Modeling and Forecasting the Demand for Electricity in New Zealand: A Comparison of Alternative Approaches," The Energy Journal, , vol. 24(1), pages 75-102, January.
    • Handle: RePEc:sae:enejou:v:24:y:2003:i:1:p:75-102
    DOI: 10.5547/ISSN0195-6574-EJ-Vol24-No1-4
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    References listed on IDEAS

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    1. Garcia-Cerrutti, L. Miguel, 2000. "Estimating elasticities of residential energy demand from panel county data using dynamic random variables models with heteroskedastic and correlated error terms," Resource and Energy Economics, Elsevier, vol. 22(4), pages 355-366, October.
    2. Tsangyao Chang & Wenshwo Fang & Li-Fang Wen, 2001. "Energy consumption, employment, output, and temporal causality: evidence from Taiwan based on cointegration and error-correction modelling techniques," Applied Economics, Taylor & Francis Journals, vol. 33(8), pages 1045-1056.
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