A Note on the Fisher Ideal Index Decomposition for Structural Change in Energy Intensity

Index numbers have been used to decompose aggregate trends in energy intensity, i.e., the ratio of energy use to activity. By making a direct appeal to the theory underlying price index numbers used by the energy decomposition literature, this note proposes the chain weighted Fisher Ideal Index as a...

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Bibliographic Details
Published in:The Energy journal (Cambridge, Mass.) Mass.), 2004-01, Vol.25 (1), p.87-101
Main Authors: Boyd, Gale A., Roop, Joseph M.
Format: Article
Language:English
Subjects:
Applied sciences
Approximation
Decomposition
Economic data
Economic indices
Economic theory
Economic trends
Electricity
Energy
Energy consumption
Energy economics
Energy industry
Energy intensity
Exact sciences and technology
General, economic and professional studies
Gross domestic product
Index numbers
Index numbers (Economics)
Management
Methodology. Modelling
Methods
Price indices
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Summary:Index numbers have been used to decompose aggregate trends in energy intensity, i.e., the ratio of energy use to activity. By making a direct appeal to the theory underlying price index numbers used by the energy decomposition literature, this note proposes the chain weighted Fisher Ideal Index as a formula that solves the 'residual problem.' The connection to index number theory also allows us to illustrate that the measures of activity used to define energy intensity need not be additive across the sectors that are involved in the decomposition. We give an empirical example using recent U.S. manufacturing data of the Fisher Ideal Index, compared to the Törnqvist Divisia index, a popular index in the energy literature.
ISSN:0195-6574
1944-9089
DOI:10.5547/ISSN0195-6574-EJ-Vol25-No1-5