Household Energy Consumption in China: Forecasting with BVAR Model Up to 2015

Abstract

In this paper, we establish VAR model to study the issue of household energy consumption (HEC) in China with status quo analysis of that from 1980 to 2009. Firstly, based on the previous literature of domestic and foreign, the main factors affecting HEC are derived. Besides, result from testing suggests that consuming capacity, population and structure are the leading power to determine HEC. Further, BVAR model is also introduced into the analytical framework to overcome the exceeding sample-size and over fitting existing in VAR. What's more, changes in energy consumption in the period of "the 12th five year plan" are forecasted that way, meanwhile, we do the same work via ARIMA with the historical data information itself. At the end of this analysis, comparison is made between the results from both the BVAR and ARIMA models to justify the reasonableness of BVAR in this paper.