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Estimating the speed of adjustment to target levels: The case of energy prices

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  • Narayan, Seema
  • Narayan, Paresh Kumar

Abstract

In this paper, we propose a model that estimates the speed of energy price adjustment to its target level. We also explain the source of price adjustment. Moreover, we extract energy price bubbles and show that bubbles help explain price adjustment. Since ours is the first paper that develops an energy price adjustment model and links it to bubbles, several avenues for future research have emerged from our analysis. The first is to provide a theoretical framework for the bubbles and price adjustment mechanism. The second direction of research will be to continue the search for other potential determinants of price adjustment.

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  • Narayan, Seema & Narayan, Paresh Kumar, 2017. "Estimating the speed of adjustment to target levels: The case of energy prices," Energy Economics, Elsevier, vol. 62(C), pages 419-427.
    • Handle: RePEc:eee:eneeco:v:62:y:2017:i:c:p:419-427
    DOI: 10.1016/j.eneco.2016.08.016
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    More about this item

    Keywords

    Price adjustment; Energy prices; Bubbles;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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