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Title: Handling zero values in the logarithmic mean Divisia index decomposition approach
Authors: Ang, B.W. 
Liu, N.
Keywords: Decomposition analysis
Zero values
Issue Date: Jan-2007
Citation: Ang, B.W., Liu, N. (2007-01). Handling zero values in the logarithmic mean Divisia index decomposition approach. Energy Policy 35 (1) : 238-246. ScholarBank@NUS Repository.
Abstract: The Logarithmic Mean Divisia Index (LMDI) decomposition approach has many desirable properties. It has been recommended by Ang [2004a. Decomposition analysis for policymaking in energy: which is the preferred methods? Energy Policy 32, 1131-1139] for adoption in energy and energy-related environmental index decomposition analysis (IDA). A complication associated with this approach is the treatment of zero values in the data set. Several studies show that replacing the zero values with a small number gives converging results. In a recent paper, Wood and Lenzen [Zero-value problems of the logarithmic mean Divisia index decomposition method. Energy Policy, in press] argue that this strategy is not necessarily robust and recommend using the analytical limits proposed in Ang et al. [1998. Factorizing changes in energy and environmental indicators through decomposition. Energy 23, 489-495]. We compare these two strategies and extend earlier works by generalizing the analytical limits of LMDI. © 2005 Elsevier Ltd. All rights reserved.
Source Title: Energy Policy
ISSN: 03014215
DOI: 10.1016/j.enpol.2005.11.001
Appears in Collections:Staff Publications

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