Decomposition Analysis In Economics

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Methodology and Data Decomposition Analysis Energy consumption in an economic system is influenced by many factors that often relate each other. It is required such decomposition analysis to determine relative contributions of pre-defined factor s to change in energy consumption. In addition, it can assist in track down the origin of variation in energy consumption and can be used to measure the effectiveness of energy policy (Heinen, 2013). Decomposition analysis focus on three different effects mainly explain changes on energy consumption namely : (i) The Activity effect. This effect is caused by the changes in activity level such population for household sector, economy output (value added) in industry sector which subsequently influenced the number of energy consumption. (ii) The structural effect. The effect illustrates the effect of share changes of different subsector or sub-group within an activity…show more content…
Hence, the structure model consist of 4 main modul, namely : (i) Key Assumptions, (ii) Demand, (iii) Transformation, and (iv) Resources. Key assumptions modul is used to define general variable that is used in model like the number population and its growth, the amount of GDP and its growth, energy price, exchange rates, economic structure, etc. The module of demand and transformation is designed in such a way to accomodate the available data regarding energy demand and supply variable. Energy demand variable is typically activity level, and energy intensity, while energy transformation variable is much more complicated from various technology. Each submodule generallly comprises technical variables from planned reserve margin, system peak load shape, efficiency (conversion) factor, capacity factor, dispatch mode, output properties mode, committed energy contract (export and import), etc. Resource module is employed to input domestic energy resource

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