Essays on Energy Demand and Household Energy Choice

This thesis consists of four self-contained papers related to energy demand and household cooking energy. Paper [I] examine the impact of price, income and non-economic factors on gasoline demand using a structural time series model. The results indicated that non-economic factors did have an impact on gasoline demand and also one of the largest contributors to changes in gasoline demand in both countries, especially after the 1990s. The results from the time varying parameter model (TVP) indicated that both price and income elasticities were varying over time, but the variations were insignificant for both Sweden and the UK. The estimated gasoline trend also showed a similar pattern for the two countries, increasing continuously up to 1990 and taking a downturn thereafter. Paper [II] studies whether the commonly used linear parametric model for estimating aggregate energy demand is the correct functional specification for the data generating process. Parametric and nonparametric econometric approaches to analyzing aggregate energy demand data for 17 OECD countries are used. The results from the nonparametric correct model specification test for the parametric model rejects the linear, log-linear and translog specifications. The nonparametric results indicate that the effect of the income variable is nonlinear, while that of the price variable is linear but not constant. The nonparametric estimates for the price variable is relatively low, approximately 0.2. Paper [III] relaxed the weak separability assumption between gasoline demand and labor supply by examining the effect of labor supply, measured by male and female working hours on gasoline demand. I used a flexible semiparametric model that allowed for differences in response to income, age and labor supply, respectively. Using Swedish household survey data, the results indicated that the relationship between gasoline demand and income, age and labor supply were non-linear. The formal separability test rejects the null of separability between gasoline demand and labor supply. Furthermore, there was evidence indicating small bias in the estimates when one ignored labor supply in the model. Paper [IV] investigated the key factors influencing the choice of cooking fuels in Ghana. Results from the study indicated that education, income, urban location and access to infrastructure were the key factors influencing household’s choice of the main cooking fuels (fuelwood, charcoal and liquefied petroleum gas). The study also found that, in addition to household demographics and urbanization, the supply (availability) of the fuels influenced household choice for the various fuels. Increase in household income was likely to increase the probability of choosing modern fuel (liquefied petroleum gas and electricity) relative to solid (crop residue and fuelwood) and transition fuel (kerosene and charcoal).