Topic: Using an econometric model in LEAP.Subscribe | Previous | Next
Winnie Njoroge 9/21/2020
Hello,
I have run an autoregressive distributed lag (ARDL) model to establish the relationship that exists between my explanatory variables (electricity price-EP, urbanization-Urb and GDP per capita) and my independent variable (domestic electricity demand- DED). My final ARDL model takes the form:
DED= -2.34+ 0.85GDP+0.15EP+1.12Urb
I want to use the above coefficients to forecast domestic electricity demand upto the year 2030. How do I go about this in LEAP?
Charlie Heaps 9/21/2020
1 Like Hi Winnie,
I suggest you create branches under the Key Assumptions branch for GDP, EP and URB (Say Key\GDP, Key\EP and Key\URB). Then enter time series data there for those three independent variables, bearing in mind that some of the data may be historical and some of it may be different scenario projections.
Then create a branch for domestic electricity consumption under LEAP's demand branches and enter an expression like this:
-2.34 + (0.85 * Key\GDP) + (0.15 * EP) + (1.12 * URB).
Make sure you are very careful about the units of measurement for each of the variables (both dependent and the dependent).
Attached is a LEAP data set that illustrates the above (will need to be adapted)!
Hope this helps,
Charlie
Econometric Demo.leap [16]
Winnie Njoroge 9/22/2020
Hello Charlie,
Thank you for your prompt and detailed response. It was indeed very helpful and I have learnt a lot. Just out of curiosity, what if I wanted to use the formula:
Energy demand = Activity level * Energy Intensity.
1. In this case what could I have used as the activity level?
2. I understand that energy intensity is the final energy consumption at a specific branch per unit of activity level, and I presume that I need future energy intensities in order to use this formula to forecast domestic electricity demand. I find this a little bit confusing because I need to forecast this final energy consumption, so how then should one have future energy intensities?
Maybe I don't understand this formula well. I will appreciate your assistance in helping me understand the concept better.
Regards,
Winnie.