This study analyzed the relationship between electricity consumption and other factors like tariffs using a VAR model. The results of the variance decomposition showed that tariff shocks did not impact consumption for the first 5 years but led to significant changes thereafter. The impulse response analysis found that tariff shocks reduced electricity consumption significantly after 5 years, with consumption returning to previous levels only by the 21st year. Therefore, the government's 2014 policy to reduce consumption through higher tariffs would start showing effects after 2019.

1. A VAR ANALYSIS
OF ELECTRICITY CONSUMPTION
Nurgul Mamatova
Higher School of Economics
Department of Statistics, Data Analysis and Demography
Moscow, Russia, nurgul.mamatova@gmail.com

2. OBJECTIVE
This study was conducted to:
- Determine the relationship between electricity consumption and other factors
- Find out how a shock to the variables affect each other
- Estimate the policy of the government in electricity consumption
METHODOLOGY
-First, we use statistical tests: Unit root test for cointegration (Augmented Dickey-
Fuller test), Granger-causality tests.
- A VAR for a system of N=3 runs 3 equations where in each case 1 lags of the
own and other variables are included.

3. RESULTS
Table 1. Variance Decomposition of Y:
Period T X Y
1 0.000 0.000 100.0
2 0.803 0.118 99.078
3 1.731 1.207 97.061
4 2.517 1.250 96.232
5 11.137 2.263 84.600
To determine the relative importance of electricity tariffs, we perform a variance
decomposition of the VAR model. Tariff shocks do not lead to a changes in consumption
during 5 years after the shock, but from the 5th year a shock has significant impacts.
Analysis of the impulse response function determines the changes in the variable
shocks, we see that shocks in tariffs after the 5th year leads to a significant reduction in
electricity consumption, and returns to the previous level only on the 21th year.
As a result,we can conclude that the effect of the tariffs policy for the reduction
electricity consumption in 2014 year, can be reached after 2019 year.
Picture1: Impulse Response Analysis