Empirical Economics

, Volume 21, Issue 2, pp 203–220 | Cite as

Residential energy demand analysis: An empirical application of the closure test principle

  • Reinhard Madlener
  • Raimund Alt


In this paper a set of ten different single-equation models of residential energy demand is being analyzed, derived by the imposition of linear parameter restrictions on a fairly general autoregressive distributed lag (ADL) model. Residential energy consumption is assumed to be explainable by households' real disposable income, movements in the real price of energy, and the temperature variable ‘heating degree days’. In the empirical application, Austrian annual data for the period 1970 to 1992 are used. The main focus of the paper is on the control of the overall significance level of the tests based on the application of the closure test principle, introduced by Marcus, Peritz, and Gabriel (1976). The application illustrates nicely how one can, by defining a closed system of hypotheses, control the significance level α in supporting the search for a suitable specific model. The wide range of estimated elasticities, however, indicates that the estimation results depend strongly on the choice of the model specification.

JEL Classification System-Numbers

C12 C22 C52 Q41 R22 


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Copyright information

© Physica-Verlag 1996

Authors and Affiliations

  • Reinhard Madlener
    • 1
  • Raimund Alt
    • 1
  1. 1.Institute for Advanced StudiesViennaAustria

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