Comparison of six decomposition methods: application to aggregate energy intensity for manufacturing in 10 OECD countries

Abstract

The work presented here compares six different methods of aggregate energy intensity decomposition applied to the same set of data, for the manufacturing sector in 10 OECD countries from 1970 to 1992. We compare the six methods on the basis of the size of the residual term, the variability of that term, and the ease of implementation of the method; the comparison of these properties is necessary for the eventual development of a forecasting tool. Based on a comparison of the size of the residual term and the variation in the term over time the adaptive weighting Divisia, in either a fixed year or a rolling year specification, is most robust, exhibiting the smallest residual term with the least variation.