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A Panel Data Analysis of Electricity Demand in Pakistan

  • Azam Chaudhry

    ()

    (Lahore School of Economics, Pakistan.)

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    This paper looks at the economy-wide demand and the firm level demand for electricity in Pakistan. The economy wide estimation of electricity demand uses panel data from 63 countries from 1998-2008, and finds that the elasticity of demand for electricity with respect to per capita income is approximately 0.69, which implies that a 1% increase in per capita income will lead to a 0.69% increase in the demand for electricity. The firm level analysis uses firm level data from the World Bank’s Enterprise Survey for Pakistan and finds that the price elasticity of demand for electricity across all firms is approximately -0.57, which implies that a 1% increase in electricity prices will lead to a 0.57% decrease in electricity demand across firms. Across sectors, the textile sector has the highest price elasticity of demand (-0.81) while the price elasticity of demand for firms in the electricity and electronics sector is the smallest (-0.31). Finally, firm level data is also used to estimate production functions in order to estimate the impact of electricity shortages on manufacturing output.

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    Article provided by Department of Economics, The Lahore School of Economics in its journal Lahore Journal of Economics.

    Volume (Year): 15 (2010)
    Issue (Month): Special Edition (September)
    Pages: 75-106

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    Handle: RePEc:lje:journl:v:15:y:2010:i:sp:p:75-106
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    1. Bhattacharyya, Subhes C. & Timilsina, Govinda R., 2009. "Energy demand models for policy formulation : a comparative study of energy demand models," Policy Research Working Paper Series 4866, The World Bank.
    2. Alan D. Woodland, 1993. "A Micro-Econometric Analysis of the Industrial Demand for Energy in NSW," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 57-90.
    3. John Dimitropoulos & Lester C Hunt & Guy Judge, 2004. "Estimating Underlying Energy Demand Trends using UK Annual Data," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 108, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    4. Masayasu Ishguro & Takamasa Akiyama, 1995. "Electricity demand in Asia and the effects on energy supply and the investment environment," Policy Research Working Paper Series 1557, The World Bank.
    5. Benjamin Bental & S. Abraham Ravid, 1982. "A Simple Method for Evaluating the Marginal Cost of Unsupplied Electricity," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 249-253, Spring.
    6. Aguirregabiria, Victor, 2009. "Econometric Issues and Methods in the Estimation of Production Functions," MPRA Paper 15973, University Library of Munich, Germany.
    7. Roop Jyoti & Aygul Ozbafli & Glenn Jenkins, 2006. "The Opportunity Cost of Electricity Outages and Privatization of Substations in Nepal," Working Papers 1066, Queen's University, Department of Economics.
    8. Bjorner, Thomas Bue & Togeby, Mikael & Jensen, Henrik Holm, 2001. "Industrial companies' demand for electricity: evidence from a micropanel," Energy Economics, Elsevier, vol. 23(5), pages 595-617, September.
    9. Urga, Giovanni & Walters, Chris, 2003. "Dynamic translog and linear logit models: a factor demand analysis of interfuel substitution in US industrial energy demand," Energy Economics, Elsevier, vol. 25(1), pages 1-21, January.
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