Sector disaggregation and the effect of structural change on industrial energy consumption

Abstract

We examine how the level of sector disaggregation, and the way industrial sectors are aggregated, influence the estimate of the effect of structural change on the growth of industrial energy consumption. If these influences are great, it would be misleading to use the results obtained for a specific level of sector disaggregation to explain, in general terms, changes in industrial energy consumption over time. We show that it is a misconception to suggest that the higher the level of sector disaggregation, the larger will be the changes in industrial energy consumption that can be attributed to structural change. We present a procedure for examining how grouping of sectors to form a higher level of sector aggregation affects the estimate of the structural effect and for identifying the source of variations. The application of this procedure is illustrated using the electricity consumption data of Singapore industry.