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An empirical analysis of petroleum demand for Indonesia: An application of the cointegration approach

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  • Sa'ad, Suleiman

Abstract

This paper uses selection criteria from various models in a bounds testing approach to cointegration to estimate the price and income elasticities of demand for total petroleum products (gasoline and diesel) and gasoline share in total products in Indonesia. The results suggest that both total products and gasoline share estimates are more responsive to changes in income than changes in the real price of petroleum products. These results have important policy implications as they suggest that policy makers may need to use market-based pricing policies and other policies such as public enlightenment in addition to regulations like minimum energy efficiency standards to promote efficiency and conservation and curb the rising consumption of petroleum products in Indonesia.

Suggested Citation

  • Sa'ad, Suleiman, 2009. "An empirical analysis of petroleum demand for Indonesia: An application of the cointegration approach," Energy Policy, Elsevier, vol. 37(11), pages 4391-4396, November.
  • Handle: RePEc:eee:enepol:v:37:y:2009:i:11:p:4391-4396
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    References listed on IDEAS

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    Cited by:

    1. Agus Budiyono & Ryuta Ray Kato, 2011. "Should Indonesia Suffer from More Reduction of the Subsidy to the Petroleum Sector?," Working Papers EMS_2011_25, Research Institute, International University of Japan.
    2. de Freitas, Luciano Charlita & Kaneko, Shinji, 2011. "Ethanol demand in Brazil: Regional approach," Energy Policy, Elsevier, vol. 39(5), pages 2289-2298, May.

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