A top-down approach for modelling the energy consumption
of households We assume that equation [15.2] can be elaborated as follows:
where I is household income (growing 3 per
cent per year), p is the energy price, α is the price elasticity (-0.3)
and AEEI is an autonomous energy efficiency improvement index (1 per cent per
year), the index 0 represents the base year, and the index t a future year.
a. Check that you understand this elaboration.
c. Determine the impact of the introduction of an energy
tax of 50 per cent on the energy demand.
d. Discuss the pros and cons of the top-down and