History
Lacko’s work received its basis from two other works. The first of these works, developed in 1995, is the method of Dobozi and Pohl. These researchers had suggested that aggregate economic activity and electrical power consumption were closely related (Lacko 2000, p. 347). In fact, from their observations, electrical consumption and GDP elasticity were close to a one to one ratio (Lacko 1999, p. 143). This was true in the case of countries under a market economy; however, it did not appear to be the case for former Soviet bloc countries.
The works of Daniel Kaufman and Aleksandr Kaliberda followed a similar path as Istvan Dobozi and Gerhard Pohl's work. Kaufman and Kaliberda developed a method that considered the growth rate of the formal market's GDP and the growth of electrical consumption (Lacko 2000, p. 123). It was evident, as noted by Dobozi and Pohl, that change within the GDP resulted in lockstep changes with electrical consumption for market economies; however, Kaufman and Kaliberda also noted that the former Soviet bloc countries did not seem to maintain this consistency. The researchers suggested that the transitionary nature of these countries' economic development created a break in the consistency between GDP and electrical consumption (Lacko 2000, p. 350). Kaufman and Kaliberda adapted their approach to allow for the calculation of this inconsistency between electrical activity and GDP.
Lacko disagreed with the previous methods use of aggregate electrical consumption as the primary source of calculations to determine the extent of the hidden economy (Lacko 1999, p. 164). Additionally, Lacko expressed concerns with the assumption of a constant electrical intensification (Lacko 1999, p. 164). The household electricity approach was developed as an alternative (Lacko 1999, pp. 142–143).
Read more about this topic: Household Electricity Approach
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