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Residential Demand for Electricity in Pakistan

Author

Listed:
  • 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.

Suggested Citation

  • Muhammad Nasir & Muhammad Salman Tariq & Ankasha Arif, 2008. "Residential Demand for Electricity in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(4), pages 457-467.
    • Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:457-467
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    File URL: http://www.pide.org.pk/pdf/PDR/2008/Volume4/457-467.pdf
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    Citations

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    Cited by:

    1. Rafat Mahmood & Sundus Saleemi & Sajid Amin, 2016. "Impact of Climate Change on Electricity Demand: A Case Study of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(1), pages 29-47.
    2. Sudeshna Ghosh, 2019. "Environmental Pollution, Income Inequality, and Household Energy Consumption: Evidence from the United Kingdom," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(02), pages 1-31, June.
    3. Noel Alter & Shabib Haider Syed, 2011. "An Empirical Analysis of Electricity Demand in Pakistan," International Journal of Energy Economics and Policy, Econjournals, vol. 1(4), pages 116-139.
    4. Hussain, Anwar & Rahman, Muhammad & Memon, Junaid Alam, 2016. "Forecasting electricity consumption in Pakistan: the way forward," Energy Policy, Elsevier, vol. 90(C), pages 73-80.
    5. Irfan, Muhammad & Cameron, Michael P. & Hassan, Gazi, 2018. "Household energy elasticities and policy implications for Pakistan," Energy Policy, Elsevier, vol. 113(C), pages 633-642.
    6. Aneel Salman & Nadia Asghar & Tahir-ul-Mulk Kahlon & Muhammad Waqas Chughtai, 2013. "Energy Consumption & Economic Growth Nexus: Evidence from Pakistan," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 9(3), pages 132-139, June.
    7. 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.
    8. Zeshan, Muhammad, 2012. "Finding the Optimal Way of Electricity Production in Pakistan," MPRA Paper 38485, University Library of Munich, Germany, revised 01 May 2012.
    9. Rab Nawaz Lodhi & R. K. Malik, 2013. "Impact of Electricity Shortage on Daily Routines: A Case Study of Pakistan," Energy & Environment, , vol. 24(5), pages 701-709, September.
    10. Waleed, Khalid & Mirza, Faisal Mehmood, 2020. "Examining behavioral patterns in household fuel consumption using two-stage-budgeting framework for energy and environmental policies: Evidence based on micro data from Pakistan," Energy Policy, Elsevier, vol. 147(C).
    11. Muhammad Irfan & Michael P. Cameron & Gazi Hassan, 2017. "Household Energy Elasticities in Pakistan: An Application of the LA-AIDS Model on Pooled Household Data," Working Papers in Economics 17/11, University of Waikato.
    12. Mohammed Bouznit & María P. Pablo-Romero & Antonio Sánchez-Braza, 2018. "Residential Electricity Consumption and Economic Growth in Algeria," Energies, MDPI, vol. 11(7), pages 1-18, June.
    13. 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.
    14. 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.
    15. Aslam, Misbah & Ahmad, Eatzaz, 2023. "Untangling electricity demand elasticities: Insights from heterogeneous household groups in Pakistan," Energy, Elsevier, vol. 282(C).
    16. Zaman, Khalid & Khan, Muhammad M. & Ahmad, Mehboob & Rustam, Rabiah, 2012. "Determinants of electricity consumption function in Pakistan: Old wine in a new bottle," Energy Policy, Elsevier, vol. 50(C), pages 623-634.

    More about this item

    Keywords

    Energy Crises; Income Elasticity; Price Elasticity; ARDL Model; Residential Demand;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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