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Residential Demand for Electricity in Pakistan

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Author Info

  • Muhammad Nasir

    (Pakistan Institute of Development Economics, Islamabad.)

  • Muhammad Salman Tariq

    (Pakistan Institute of Development Economics, Islamabad.)

  • Ankasha Arif

    (Department of Economics, Quaid-i-Azam university, Islamabad.)

Abstract

For about a year now, Pakistan is facing the worst energy crisis of her history. If on one hand, the increase in the oil prices at the world level is severely affecting the common masses, on the other hand, the shortage of electricity is creating havoc in the country. Beside others, one important reason that is advocated for this shortage is the rise in electricity demand due to increase in production as well as rise in household income. Furthermore, it is believed that increasing the unit price of electricity will reduce the electricity demand. That is why the unit prices of electricity vary with different range of unit usage. This motivates us to calculate price elasticity as well. Hence, using time series data from 1979 to 2006, we estimated ARDL model to investigate income and price elasticities of electricity demand. Our results show that electricity demand is price inelastic in both short run and long run. Moreover, income elasticity is almost unitary in short run as well as in long run. In addition, household size has a strong positive impact on electricity demand in Pakistan.

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Bibliographic Info

Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

Volume (Year): 47 (2008)
Issue (Month): 4 ()
Pages: 457-467

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Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:457-467

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Related research

Keywords: Energy Crises; Income Elasticity; Price Elasticity; ARDL Model; Residential Demand;

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Cited by:
  1. Noel Alter & Shabib Haider Syed, 2011. "An Empirical Analysis of Electricity Demand in Pakistan," International Journal of Energy Economics and Policy, Econjournals, Econjournals, vol. 1(4), pages 116-139.
  2. Zeshan, Muhammad, 2013. "Finding the cointegration and causal linkages between the electricity production and economic growth in Pakistan," Economic Modelling, Elsevier, vol. 31(C), pages 344-350.
  3. Zeshan, Muhammad, 2012. "Finding the Optimal Way of Electricity Production in Pakistan," MPRA Paper 38485, University Library of Munich, Germany, revised 01 May 2012.
  4. Theresa Chaudhry, 2010. "Estimating Residential Electricity Demand Responses in Pakistan’s Punjab," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(Special E), pages 107-138, September.
  5. Hasan, Syed Akif & Subhani, Muhammad Imtiaz & Osman, Ms. Amber, 2012. "The energy short fall and its after effects (a case study for Karachi city in context to Karachi electric supply corporation)," MPRA Paper 37663, University Library of Munich, Germany.

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