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Open AccessArticle

Revisiting Energy Demand Relationship: Theory and Empirical Application

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Energy and Macroeconomics Department, King Abdullah Petroleum Studies and Research Center, P.O. Box 88550, Riyadh 11672, Saudi Arabia
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Research Program on Forecasting, Economics Department, The George Washington University, 2115 G Street, NW, Washington, DC 20052, USA
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Modeling Socio-economic Processes, Institute of Control Systems, 9 Bakhtiyar Vahabzadeh, Baku 1141, Azerbaijan
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Department of Statistics and Econometrics, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku AZ1141, Azerbaijan
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Author to whom correspondence should be addressed.
Sustainability 2020, 12(7), 2919; https://doi.org/10.3390/su12072919
Received: 27 January 2020 / Revised: 5 March 2020 / Accepted: 17 March 2020 / Published: 6 April 2020
In this paper, we revisit the theoretical framework for energy demand. We then use this theoretical framework to empirically model the Saudi Arabian industrial electricity demand. We show, in the case of Saudi Arabian data, that imposing parsimonious energy demand specification on data without testing relevant assumptions can lead to biased estimations and noticeably poor approximations, while imposing general energy demand specification without accounting for the data properties can lead to redundant estimations and lower approximation than what could be obtained otherwise. Combining the theory with the data can provide unbiased and irredundant estimations with high levels of approximations. Hence, this paper recommends, based on the empirical findings, that a better strategy would be the combination of theoretical coherence with data coherence in the General to Specific Modeling (GtSM) framework for the empirical analyses of energy demand. View Full-Text
Keywords: energy demand modeling; general to specific modeling; combination of theory with data; Saudi Arabia energy demand modeling; general to specific modeling; combination of theory with data; Saudi Arabia
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MDPI and ACS Style

Hasanov, F.J.; Mikayilov, J.I. Revisiting Energy Demand Relationship: Theory and Empirical Application. Sustainability 2020, 12, 2919. https://doi.org/10.3390/su12072919

AMA Style

Hasanov FJ, Mikayilov JI. Revisiting Energy Demand Relationship: Theory and Empirical Application. Sustainability. 2020; 12(7):2919. https://doi.org/10.3390/su12072919

Chicago/Turabian Style

Hasanov, Fakhri J.; Mikayilov, Jeyhun I. 2020. "Revisiting Energy Demand Relationship: Theory and Empirical Application" Sustainability 12, no. 7: 2919. https://doi.org/10.3390/su12072919

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