Log- Mean Divisia Index Method

Abdulkadir Bektas

Ministry of Energy and Natural Resources, Nasuh Akar Mah. Türk Ocağı Cad. No:2 06520 Cankaya – Ankara / Turkey

Abstract

A new method of energy decomposition called Log- Divisia Index Method I (LMDI I) is presented. It has the desirable characteristics of perfect decomposition and aggregation consistency. Perfect decomposition guarantees that the results of the decomposition do not include a residual period. Consistency in aggregation allows sub-group estimates to be aggregated in a consistent manner [1]. To analyze and understand historical changes in economic, environmental, employment or other socio-economic indicators, it is useful to assess the driving forces or determinants that underlie these changes. Index decomposition analysis has been used to analyze changes in indicators such as energy use, CO2-emissions, labor demand and value added. The changes in these variables are decomposed into determinants such as technological, demand, and structural effects. LMDI uses aggregate data at the sector-level. The IDA method has developed quite independently, which has resulted in method being characterized by specific, unique techniques and approaches [2].
Keywords: LMDI Method, Decomposition analysis, Energy, Emissions.

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