Looking for hysteresis in coal consumption in the US

This paper estimates an unobserved components model to explore coal consumption in the USA. We ask whether coal consumption exhibits hysteresis, defined as a dynamic structure in which the cyclical component of coal consumption has permanent effects on the natural component. In contrast to previous analysis, we provide evidence in favor of hysteresis in coal consumption, by using the nonlinear framework proposed recently by Pérez-Alonso and Di Sanzo [13], in which threshold type nonlinearities are introduced by allowing past cyclical consumption to have a different impact on the natural component depending on the regime. The article discusses implications of the findings for energy conservation policies.