Are Changes in Electricity Production Perpetual or Temporary: An Evidence from Emerging Countries

AbstractThis study intends to distinguish the stationarity features of electricity production from oil, gas, and coal (% of total) in six emerging countries for 1971–2015. Within this objective, the first-generation panel unit root tests, the second-generation panel unit root tests introduced by Pesaran (General diagnostic tests for cross section dependence in panels, Institute for the Study of Labor (IZA), 2004), and a newly offered panel unit root test allow for sharp and smooth structural breaks improved Bahmani-Oskooee et al. (Applied Financial Economics, 24:1429–1438, 2014) are employed. The first and second-generation panel unit root test result displays that the electricity production is not stationary. This finding mentions that the energy policies will have a long-lasting impression on electricity production. In contrast, Panel Unit Root Tests with Multiple Sharp Breaks test confirm that the fluctuations in the electricity production are temporary and, therefore, the electricity production is prone to return its long-run trend path. According to the univariate version of the unit root tests, the temporary effects of the shocks on the electricity production holds for Brazil, Mexico, and Turkey; while the permanent effect is valid for China, Indonesia, and India. According to the result, it is recommended that China, Indonesia, and India diminish the percentage of nonrenewable energy resources in electricity production.