Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

As electricity consumption is a useful real-time proxy for economic activity, this paper investigates whether electricity consumption has a leading economic information and there is asymmetry of the economic cycle. We present a new model called time-varying parameter generalized hamilton-plucking model. We have reached the two broad conclusions. First, It is found that electricity consumption has an average lead of 2 months at peaks and an average lead of 3~4 months at trough. Second, the electricity consumption increases when the economy is booming and it is reduced when the economy is in recession. In other words, electricity consumption has asymmetries over business cycle.