On the persistence of sectoral electricity consumption in Iran: a GARCH-based unit root approach

ABSTRACT

This paper examines the stationary properties of the electricity consumption of five main sectors (residential, public services, industrial, agricultural, and street lighting) in Iran over the period 1967–2017. To analyze the data, we apply the Lagrange Multiplier (LM) and GARCH-based unit root tests with structural breaks. The results of our study provide strong evidence that electricity consumption is stationary in the industrial, residential and street lighting sectors; thus, sharp shocks have transitory effects on electricity consumption, implying that consumption trends in these sectors will ultimately return to their long-run equilibrium. However, the time series of electricity consumption for the agricultural and public services sectors contain a unit root, and thus shocks to their electricity consumption are permanent. The foregoing findings can help policymakers in each sector to design efficient electricity management policies.

KEYWORDS:

• Electricity consumption
• unit root
• breaks

Notes

¹ See Narayan and Liu (2015), pg. 396.:

² For more information, see Narayan and Liu (2015).