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Dynamic OLS estimation of the U.S. import demand for Mexican crude oil

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  • Camacho-Gutiérrez, Pablo

Abstract

This paper estimates the U.S. import demand for crude oil from Mexico. The analysis is based on time series from January 1990 to December 2010. Time series properties of the processes that generate the data are assessed in order to specify the order of integration for each series. According to results from unit root tests, all the series under study are unit root non-stationary. The paper then estimates the cointegrating import demand regression using Dynamic OLS procedure. Residuals from the DOLS cointegrating regression are tested and found to be stationary; thus, the cointegrating regression is not spurious. According to estimation results, U.S. import demand for Mexican crude oil is income inelastic, perfect price inelastic, and responsive to changes in both U.S. stock of oil (excluding SPR) and unemployment rate in the U.S. Also, this paper points to the estimate bias from omitting relevant variables as it is common in the mainstream literature on crude oil import demand.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:30608
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    References listed on IDEAS

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    Cited by:

    1. Fani, Djomo Choumbou Raoul & Tabetando, Rayner & Henrietta, Ukpe Udeme & Francois, Siewe, 2022. "The Impact of Government Spending and Food Imports on Nutritional Status in Nigeria: A Dynamic OLS Application and Simulation," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 10(1), January.
    2. Khalil Jebran & Abdullah & Mahmoud Moustafa Elhabbaq & Arshad Ali, 2017. "Income and Price Elasticities of Crude Oil Demand in Pakistan," Global Business Review, International Management Institute, vol. 18(6), pages 1373-1383, December.
    3. Adewuyi, Adeolu O., 2016. "Determinants of import demand for non-renewable energy (petroleum) products: Empirical evidence from Nigeria," Energy Policy, Elsevier, vol. 95(C), pages 73-93.
    4. Rajesh Sharma & Pradeep Kautish & D. Suresh Kumar, 2021. "Assessing Dynamism of Crude Oil Demand in Middle-Income Countries of South Asia: A Panel Data Investigation," Global Business Review, International Management Institute, vol. 22(1), pages 169-183, February.

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    More about this item

    Keywords

    Crude Oil Demand; Unit Root; Dynamic OLS.;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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