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An Estimation of Residential Water Demand Using Co-Integration and Error Correction Techniques

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  • Martinez-Espineira, Roberto

Abstract

In this paper short- and long-run price elasticities of residential water demand are estimated using co-integration and error-correction methods. Unit root tests reveal that water use series and series of other variables affecting use are non-stationary. However, a long-run co-integrating relationship is found in the water demand model, which makes it possible to obtain a partial correction term and to estimate an error correction model. The empirical application uses monthly time-series observations from Seville (Spain). The price-elasticity of demand is estimated as around -0.1 in the short run and -0.5 in the long run. These results are robust to the use of different specifications.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 615.

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Date of creation: Apr 2005
Date of revision: Jan 2006
Handle: RePEc:pra:mprapa:615

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Keywords: seasonal unit roots; residential water demand; price elasticity; time-series; co-integration; Error Correction Model;

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Cited by:
  1. Marie-Estelle Binet & Younes Ben Zaïd, 2011. "A Seasonal Integration and Cointegration Analysis of Residential Water Demand in Tunisia," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201122, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  2. David R. Bell & Ronald C. Griffin, 2011. "Urban Water Demand with Periodic Error Correction," Land Economics, University of Wisconsin Press, vol. 87(3), pages 528-544.
  3. Ben Zaied Younes, 2013. "A long-run analysis of residential water consumption," Economics Bulletin, AccessEcon, vol. 33(1), pages 536-544.

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