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A Panel Data Analysis of Electricity Demand in Pakistan

Author

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  • Azam Chaudhry

    (Lahore School of Economics, Pakistan.)

Abstract

This paper looks at the economy-wide demand and the firm level demand for electricity in Pakistan. The economy wide estimation of electricity demand uses panel data from 63 countries from 1998-2008, and finds that the elasticity of demand for electricity with respect to per capita income is approximately 0.69, which implies that a 1% increase in per capita income will lead to a 0.69% increase in the demand for electricity. The firm level analysis uses firm level data from the World Bank’s Enterprise Survey for Pakistan and finds that the price elasticity of demand for electricity across all firms is approximately -0.57, which implies that a 1% increase in electricity prices will lead to a 0.57% decrease in electricity demand across firms. Across sectors, the textile sector has the highest price elasticity of demand (-0.81) while the price elasticity of demand for firms in the electricity and electronics sector is the smallest (-0.31). Finally, firm level data is also used to estimate production functions in order to estimate the impact of electricity shortages on manufacturing output.

Suggested Citation

  • Azam Chaudhry, 2010. "A Panel Data Analysis of Electricity Demand in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(Special E), pages 75-106, September.
    • Handle: RePEc:lje:journl:v:15:y:2010:i:sp:p:75-106
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    References listed on IDEAS

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    More about this item

    Keywords

    Electricity; demand; industrial; price elasticity; Pakistan.;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts

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