Will energy strategies to reduce oil imports by countries dependent on foreign oil be effective? Evidence from residual augmented least squares and cross-sectionally augmented panel unit root tests

Abstract

The testing for stationarity of energy imports, in order to infer whether policies to reduce resource dependence are likely to have long term impact, is limited in the literature. A recently introduced residual augmented least squares procedure is used to examine the stationarity of crude oil imports per capita in 32 countries. The results provide evidence for nonstationarity in oil imports per capita of 10 countries (or 31% of the total sample size). In order to provide corroborating evidence, we employ recent panel unit root tests, which provide for the possibility of cross-sectional dependence among the members of a panel. The empirical findings provide support in favour of stationarity of imports per capita in the series. The policy implications of the results are discussed.