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Price and income elasticities of crude oil import demand in South Africa: A cointegration analysis

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  • Ziramba, Emmanuel

Abstract

This paper examines the demand for imported crude oil in South Africa as a function of real income and the price of crude oil over the period 1980-2006. We carried out the Johansen co integration multivariate analysis to determine the long-run income and price elasticities. A unique long-run cointegration relationship exists between crude oil imports and the explanatory variables. The short-run dynamics are estimated by specifying a general error correction model. The estimated long-run price and income elasticities of -0.147 and 0.429 suggest that import demand for crude oil is price and income inelastic. There is also evidence of unidirectional long-run causality running from real GDP to crude oil imports.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 12 (December)
Pages: 7844-7849

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Handle: RePEc:eee:enepol:v:38:y:2010:i:12:p:7844-7849

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Crude oil import South Africa Cointegration;

References

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  1. Dermot Gately & Hiliard G. Huntington, 2002. "The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 1), pages 19-55.
  2. John C.B. Cooper, 2003. "Price elasticity of demand for crude oil: estimates for 23 countries," OPEC Energy Review, Organization of the Petroleum Exporting Countries, Organization of the Petroleum Exporting Countries, vol. 27(1), pages 1-8, 03.
  3. Ghosh, Sajal, 2009. "Import demand of crude oil and economic growth: Evidence from India," Energy Policy, Elsevier, Elsevier, vol. 37(2), pages 699-702, February.
  4. Altinay, Galip, 2007. "Short-run and long-run elasticities of import demand for crude oil in Turkey," Energy Policy, Elsevier, Elsevier, vol. 35(11), pages 5829-5835, November.
  5. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, Econometric Society, vol. 55(2), pages 251-76, March.
  6. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  7. Akinboade, Oludele A. & Ziramba, Emmanuel & Kumo, Wolassa L., 2008. "The demand for gasoline in South Africa: An empirical analysis using co-integration techniques," Energy Economics, Elsevier, Elsevier, vol. 30(6), pages 3222-3229, November.
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Citations

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Cited by:
  1. Camacho-Gutiérrez, Pablo, 2010. "Dynamic OLS estimation of the U.S. import demand for Mexican crude oil," MPRA Paper 30608, University Library of Munich, Germany.
  2. Lin, Boqiang & Ouyang, Xiaoling, 2014. "Electricity demand and conservation potential in the Chinese nonmetallic mineral products industry," Energy Policy, Elsevier, Elsevier, vol. 68(C), pages 243-253.
  3. Delavari, Majid & Gandali Alikhani, Nadiya, 2012. "The Effect of Crude Oil Price on the Methanol price," MPRA Paper 49727, University Library of Munich, Germany.
  4. Bukhari M.S. Sillah & Hamad M.H. Al-Sheikh, 2012. "Income, Price, and Government Expenditure Elasticities of Oil in the Gulf Cooperation Council Countries," International Journal of Energy Economics and Policy, Econjournals, Econjournals, vol. 2(4), pages 333-341.
  5. A. Talha Yalta, 2013. "Small Sample Bootstrap Inference of Level Relationships in the Presence of Autocorrelated Errors: A Large Scale Simulation Study and an Application in Energy Demand," Working Papers, TOBB University of Economics and Technology, Department of Economics 1301, TOBB University of Economics and Technology, Department of Economics.
  6. Akbar Komijani & Nadiya Gandali Alikhani & Esmaeil Naderi, 2013. "The Long-run and Short-run Effects of Crude Oil Price on Methanol Market in Iran," International Journal of Energy Economics and Policy, Econjournals, Econjournals, vol. 3(1), pages 43-50.
  7. Delavari, Majid & Gandali Alikhani, Nadiya, 2013. "The Dynamic Effects of Crude Oil and Natural Gas Prices on Iran's Methanol," MPRA Paper 49733, University Library of Munich, Germany.
  8. Altinay, Galip, 2007. "Short-run and long-run elasticities of import demand for crude oil in Turkey," Energy Policy, Elsevier, Elsevier, vol. 35(11), pages 5829-5835, November.
  9. Delavari, Majid & Gandali Alikhani, Nadiya & Naderi, Esmaeil, 2012. "The analyses of Crude Oil and Natural Gas Prices on Petrochemicals Products: A Case Study of IRAN's Methanol," MPRA Paper 48788, University Library of Munich, Germany.
  10. Kim, Hyun Seok & Baek, Jungho, 2013. "Assessing dynamics of crude oil import demand in Korea," Economic Modelling, Elsevier, vol. 35(C), pages 260-263.
  11. Suganthi, L. & Samuel, Anand A., 2012. "Energy models for demand forecasting—A review," Renewable and Sustainable Energy Reviews, Elsevier, Elsevier, vol. 16(2), pages 1223-1240.

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