earticle

영어

As electricity is an key input in almost every production process, it is essential to quantify the impact of economic policies aimed at electricity conservation on output. This research investigates the effect of unanticipated shocks in electricity consumption, technical efficiency, and electricity price on the value added in the heterogenous service and industrial sectors, under a demand side model. Ireland is utilized as a case study as it is pursuing ambitious electricity conservation targets while in the midst of a severe economic recession. Given the important role of electricity as an input in both the services and industrial sectors, it was feared that these energy conservation targets may adversely impact on these sectors and as a result worsen the national economic situation. Findings show that value added, electricity consumption, electricity price and technical efficiency are co-integrated for both the service and industrial sectors. However, impulse response functions show that positive technical efficiency and consumption shocks have persistent negative effects on the value added of both sectors. Therefore, a direct electricity conservation policy, that puts a constraint on electricity consumption, should not have an adverse effect on sector specific value added.