97/03336 Decomposition of aggregate energy and gas emission intensities for industry: A refined Divisia index method

Several methods for decomposing energy consumption or energy-induced gas emissions in industry have been proposed by various analysts . Two commonly encountered problems in the application of these methods are the existence of a residual after decomposition and the handling of the value zero in the data set. To overcome these two problems , we modify the often used Divisia index decomposition method by replacing the arithmetic mean weight function by a logarithmic one . This refined Divisia index method can be shown to give perfect decomposition with no residual . It also gives converging decomposition results when the zero values in the data set are replaced by a sufficiently small number. The properties of the method are highlighted using the data of the